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Pledge to protect public services

Scottish Budget: Swinney to defy Osborne austerity

John Swinney at CodeClanFinance Secretary John Swinney has pledged to deliver a Budget today that continues to prioritise key public services.

Mr Swinney, speaking after a visit to the construction site of the new Royal Edinburgh Hospital campus, noted that the Chancellor George Osborne has imposed real terms cuts on Scotland every year from now until 2020.

He argues that more than £1 billion of those cuts are still to come between now and the end of the decade.

The Deputy First Minister said: “I am determined to protect key priorities such as schools, hospitals and police. However, as a consequence of UK Government spending decisions, the Scottish Budget will continue to fall in real terms – as it has done since 2010 – until the end of this decade.

“That places a significant pressure on the funding of our public services and requires us to continually reform the way in which we deliver those public services.

“Despite these pressures, the Scottish Government will defend and protect the key priorities that the people of Scotland expect us to deliver on. Critical pillars of Scottish life – our schools, hospitals and police – will not be sacrificed to the Chancellor’s austerity obsession.

“In recent years we have been able to deliver better outcomes for the people of Scotland. More police, lower crime, better schools, tuition-free university education and a health budget that is at a record level.

“We are working to create a more inclusive economy, where every individual can fulfil their potential. That approach will be central to our Budget plans.”

Mr Swinney will also address the new income tax powers and will be expected to state whether or not he will follow the Chancellor’s decision to impose an extra levy on second homes and buy-to-let properties.

Business leaders are hoping the Finance Secretary will say something on business rates, possibly announce a review in line with the process under way in England.

Mr Swinney’s new powers include setting the Scottish rate of income tax (SRIT) which was part of the Scotland Act 2012 and takes effect in April. This will see the current income tax rates reduced by 10p in the pound for Scotland, leaving the Scottish Government to set a rate to generate its own income.

The government has spoken of increasing the top rate. Any change, however, has to be applied across the bands, which means the Government can’t increase the top rate without also increasing the lower rates.

Increasing the SRIT, for example from 10p to 12p, will mean raising the basic rate from 20p to 22p, the higher rate from 40p to 42p and the additional (top) rate from 45p to 47p.

It would result in a larger percentage increase in income tax liabilities for lower earners compared to higher earners. Lowering the SRIT, for example from 10p to 8p, will result in a larger percentage decrease in income tax liabilities for lower earners compared to higher earners.

There are about 14,000 additional rate taxpayers in Scotland who make up half a percent of the taxpayer population in Scotland. Nearly one in seven additional rate taxpayers in Scotland are employed in health and social work, more than in Scotland’s finance and insurance sector.

Most analysts believe SRIT will be set at 10p which means taxes will remain the same as those in England.

Who pays additional (top) rate tax?

top rate taxpayers infograph

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