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Scottish Budget challenge

Labour plans tax hike to invest in public services

Richard Leonard

Richard Leonard: says plans will and ‘failed experiment of austerity’ (photo by Terry Murden)

Scottish Labour is proposing higher taxes to increase spending on public services by a further £1 billion.

The party will challenge Finance Secretary Derek Mackay’s draft Budget in a debate in Holyrood on Wednesday by putting forward its own tax system, in including a new band at 50p.

Mr Mackay criticised what he called the “fantasy figures” and the Scottish Conservatives accused both parties of “hammering” taxpayers.

The SNP government wants to introduce new bands to the current income tax structure which is made up of a 20p basic rate, a 40p higher rate kicking in at £43,001 and a 45p additional rate for earnings over £150,000.

The government wants to add a 19p “starter” rate and a 21p intermediate rate, while adding 1p to the higher and additional rates.

The five-band system raise an extra £164m but would see many lower earners pay less tax.

Labour wants to add a 50p top rate of tax for earnings over £100,000 and change the thresholds of the other higher rates.

Labour is proposing other levies, including a tourist tax and a land value tax, both to be collected by councils, and a “social responsibility levy” on bars and pubs for every unit of alcohol sold.

The party has also proposed taking an extra £176m from the non-domestic rates pool.

It claims its package would raise £960m or £540m more than Mr Mackay’s proposals.

It wants to use the extra income to lift public sector wages, increase child benefit by £5 per week. raise the NHS budget by £100m and inject a further £545m into councils.

Mr Leonard said it was “time to end the failed experiment of austerity by making radical use of the powers available to the Scottish Parliament”.

He said: “It’s not good enough to tinker around the edges with as many as 260,000 children living in poverty. We should be looking at a budget that stops the cuts to lifeline services and increases child benefit.

“Labour is willing to ask the wealthiest few to pay more to benefit the many, and redistribute real economic power to local communities. The question now for other parties is do they agree with us?”

Mr Mackay said the tourist tax and land value tax would require new legislation.

Lib Dem Leader Willie Rennie said: “There’s a huge whiff of wishful thinking to Scottish Labour’s plans and it is far from clear that all parts of Scotland will see a boost as a result.

“The public need to have confidence that we are mindful of their personal finances as well as the public purse. All parties have a duty to get that balance right.”

Scottish government proposals
Income range Tax rate per pound
£11,850 – £13,850 19p
£13,851 – £24,000 20p
£24,001 – £44,273 21p
£44,273 – £150,000 41p
Above £150,000 46p
Scottish Labour proposals
Income range Tax rate per pound
£11,850 – £13,850 19p
£13,851 – £24,000 20p
£24,001 – £42,385 21p
£42,385 – £60,000 41p
£60,001 – £100,000 46p
Above £100,000 50p

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