Scotland's Economy

New progressive tax system an investment in Scotland’s future

April 1, 2018 by No Comments

Our progressive approach to changing taxation, which comes into effect next week, heralds a positive investment in our country’s future. Our new tax system means divergence from Westminster on fiscal policy, but in my opinion it will deliver devolution and the priorities of the majority of the people of Scotland.

The changes will deliver an additional £428 million in 2018/19, augmenting our current budget to support vital public services and investment in our economy.

Moreover, the new system also helps this government renew and deepen our social contract with the Scottish people. Using our devolved tax powers to generate extra revenue to support the Scottish budget and ensure we keep funding and supporting vital public services free at the point of use such as free prescriptions, free tuition and free personal care.

As people living elsewhere in the UK see the cost of accessing many of these services rising, this Government is continuing to invest in a social contract which helps make Scotland such an attractive place to live.

Our progressive tax policy also protects low earners through the introduction of a new starter rate of tax and also introduces a new intermediate rate of 21% while increasing the higher and top rates to 41% and 46% respectively.

This 1p increase for the top rate making sure those on the highest incomes make a fair and proportionate contribution.

As a result of these changes, and the increase in the personal allowance, all taxpayers earning up to £33,000 – 70% of all taxpayers – will pay less than last year for the same income.

In fact, under the new system the majority of Scottish taxpayers (55%) will pay less in 2018-19 than they would were they anywhere else in the UK. Overall the new rates will make the system fairer and help deliver the best outcomes for the people of Scotland.

These measures combined with our investment in the NHS, our economy, infrastructure, education and essential public services, ensure Scotland will be the fairest taxed part of the UK, and will provide the best deal for its taxpayers.

It is a progressive approach that will benefit all of Scotland, enabling us to increase the current health budget by £400 million and provide above inflation investment in our Police, universities, colleges and skills bodies as well as local government services.

It will also support the provision of £120 million – over and above core education funding – directly to head teachers, to help close the attainment gap and help ensure all our young people get the best opportunities to fulfil their potential. While in the crucial early years, it will help provide £243 million towards expanding free nursery education and childcare.

Our budget will also deliver a £4 billion commitment to new infrastructure investment next year as well as our plans to deliver 50,000 new homes, new roads and railways, electric vehicles and 100% superfast broadband to every corner of Scotland.

Overall, it is a forward looking approach which promotes economic growth across the board while protecting households from the worst effects of the current Brexit uncertainty as well as the on-going austerity programme of the UK Government.

Implementing this new, fairer, more progressive tax system next week marks an important day for our country, introducing an approach that will help deliver the best outcomes for the people of Scotland, now and in the years to come.


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