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Dugdale raises stakes on Scottish finances

Labour plans 1p on income tax to avoid cuts to services

Kezia Dugdale vidLabour leader Kezia Dugdale will today propose a penny on income tax to offset the Scottish Government’s proposed cuts to local services.

Ms Dugdale would introduce a £100 refund to those earning below £20,000 a year to ensure that the lowest paid workers do not suffer disproportionately.

In a huge electoral gamble, Ms Dugdale will put tax at the centre of the campaign and put pressure on the SNP to say how it would avoid being tarnished as the party of cutbacks.

The Lib Dems also want to raise the basic rate of income tax by 1p.

The SNP is expected to stick to its parity with Westminster on the basic rate while sharing Labour’s aspirations for a  50p top rate for high earners.

Under a Labour administration the Scottish Rate of Income Tax (SRIT) would rise from raised from 10p to 11p and this would trigger a similar 1p rise in the basic rate from 20p to 21p.

Ms Dugdale will today say that if it comes to choice between using the powers being made available or making cuts to education “we choose to use our powers.”

She will attack Finance Secretary John Swinney’s Budget decision to maintain tax rates in line with Westminster and say that the 1p on income tax will raise £500 million which Mr Swinney is cutting from public services.

His plans have drawn criticism from opponents who accuse him of endorsing the Westminster government’s austerity measures.

The Conservatives propose cutting taxes and are supported by the report by the Independent Commission for Competitive and Fair Taxation in Scotland which argued that higher taxes have an adverse effect on economic activity and that cutting them would increase the overall tax yield.

Labour’s plans would mean that someone on the living wage earning about £16,000 would be about £51 a year better off, while a nurse on a salary of about £25,000 would be left about £140 a year worse off.

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