As Mackay raises pressure on Davidson...
Johnson urged to trim income tax cut in Scots backlash
Boris Johnson: under pressure
Boris Johnson may be forced even by his own supporters to water down his proposed income tax cut for higher paid workers amid growing outrage over its impact on Scotland.
The Tory leadership frontrunner wants to raise the threshold for the 40p tax rate from £50,000 to £80,000, but has sent a shiver though his Scottish MPs.
Mr Johnson’s £9.6 billion giveaway would be partly covered by an increase in national insurance contributions, which remain reserved to Westminster. For those in Scotland earning between £43,431 and £80,000 it would mea NI contributions rising by up to £3,000 with no corresponding cut in tax.
Supporters of Mr Johnson’s leadership campaign have called on the SNP to match its proposal to prevent a gap of nearly £8,000 opening up between the tax bills of higher earners in Scotland and the rest of the UK. But others in the party believe any rise may need to be smaller than proposed and will meet Liz Truss, tipped to become Mr Johnson’s Chancellor, to press their concerns.
Scottish finance secretary Derek Mackay has called on Scottish Tory leader to disown the tax plan.
“Ms Davidson has every reason to be worried about the prospect of Boris Johnson becoming Prime Minister – but she seems far more interested in what it means for her own political career than how it will affect the people of Scotland,” he said.
“The SNP has used the tax powers at our disposal to ensure that Scotland is the fairest tax part of the UK and for a majority of people it is also the lowest tax part of the UK.
“Boris Johnson’s plans mean that, not for the first time, our efforts to make Scotland fairer and more prosperous will be undermined by a reckless, right-wing Tory government at Westminster.”
He added: “Ruth Davidson must immediately make clear – does she support Boris Johnson’s tax hike?
“If she doesn’t, will she instruct all 13 of her MPs to vote against any UK Budget in which these outrageous tax plans are included? Or will she simply fall in to line with the Tory leadership and forget about her previous statements, as she so often does?”
However, the Institute for Fiscal Studies (IFS) published analysis saying the tax cut would produce an increase in the Scottish Government’s budget because of the way that devolved tax powers were structured. IFS associate director David Phillips said the Scottish Government “actually gets a budget boost because of the income tax cut in the rest of the UK.
“Scotland’s fiscal framework means the reduction in tax bills and revenues in the rest of the UK translates into higher block grant funding for the Scottish Government.
“This would allow for higher spending on public services north of the Border. Or for the Scottish government to cut its own taxes – perhaps matching Mr Johnson’s proposed cut to income tax for high earners.”