MSPs approve Scottish government income tax plans

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Kate Forbes
Image caption,
Finance minister Kate Forbes said the majority of Scottish taxpayers paid less than those elsewhere in the UK

MSPs have voted to approve the Scottish government's income tax plans for the coming year.

Finance Secretary Derek Mackay chose not to pass on a tax cut given to higher earners elsewhere in the UK.

This gives the government extra money to spend but means the gap between the Scottish income tax regime and that in the rest of the UK continues to grow.

The move was signed off at Holyrood by a vote of 61 to 52, with the six Green members abstaining.

Mr Mackay signed off a deal with the Greens to ensure the budget passes at all stages, with the final votes in the chamber on Thursday.

Scotland has a five-band income tax system, which sees lower earners pay slightly less in tax than those elsewhere in the UK, while higher earners pay more.

Only minimal changes are being made for 2019-20 - most of the rates thresholds are to rise with inflation, but the higher rate threshold has been frozen at £43,430.

Because the higher rate threshold in the rest of the UK is rising to £50,000, this means the gap between what higher earners north and south of the border are taxed will grow.

Finance minister Kate Forbes told MSPs that the majority of Scottish taxpayers would pay less than counterparts south of the border.

She said: "A cornerstone of the Scottish government approach to taxation is certainty, and in 2019-20 we will not increase any of the rates of income tax.

"This will ensure that 55% of Scottish taxpayers continue to pay less than they would if they lived elsewhere in the UK."

Image caption,
Source: Fraser of Allander Institute

The Scottish Greens will vote with the SNP to pass Mr Mackay's spending plans on Thursday, although they abstained in the rate resolution vote.

Co-convener Patrick Harvie said: "We don't believe that it goes far enough, but we're not willing to put at risk the wider achievements we've made on amendments to the budget, which would fall if this rate resolution falls."

All of Holyrood's other parties were critical of the government's plans, and voted against the rates resolution.

Scottish Conservative finance spokesman Murdo Fraser accused the SNP of breaking manifesto pledges.

Labour's James Kelly said the budget would offer a tax cut to chief executives while local councils are facing cuts.

And Lib Dem leader Willie Rennie argued for a "modest" tax rise to raise extra funds for education.