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IFS raises questions

Sturgeon manifesto plan ‘a difficult circle to square’

Manifesto plan: Nicola Sturgeon confident in plans

Nicola Sturgeon’s plans to splash billions of extra spending on the NHS while freezing income tax rates would be a “difficult circle to square”, according to a key public policy group.

The SNP’s manifesto for the Holyrood election on 6 May promises to increase frontline NHS spending by at least 20%, costing £2.5 billion, and proposes £10bn to be spent on NHS facilities.

The party also wants to eliminate dental charges and double the value of the Scottish child payment.

There will also be a rise in mental health spending and extra costs for setting up a National Care Service.

As well as freezing tax bands over the five-year parliamentary term it promises to cut business rates, the other main source of revenue for the Scottish government.

One new revenue-raising proposal is a digital sales tax, generally known as an “Amazon tax”, though this may prove difficult to implement in isolation in view of the global nature of online sales. Chancellor Rishi Sunak was expected to announce an online tax in the Budget but is believed to be engaged in talks with other tax jurisdictions.

Daily Business response to tweets on SNP’s online tax plan

The Institute for Fiscal Studies, which specialises in UK taxation and public policy, said for the SNP to meet its spending commitments “could make this an especially difficult circle to square”.

Ms Sturgeon insisted the commitments are “based on assessments and forecasts about the growth in our tax revenues” which are forecast to grow over that period.

Ms Sturgeon described the manifesto as a “serious programme for serious times”.

Other commitments include an additional £500m to support new, green jobs and reskill people for the jobs of the future, and an investment of £33bn in infrastructure projects over the next five years. The party will build 100,000 more affordable homes over the next decade.

David Phillips, an associate director at the IFS, said: “The SNP’s manifesto continues with a trend of greater universality in public service provision – providing services free to everyone.

“Paying for all of these pledges in what could be a tight funding environment over the next few years will require tricky trade-offs though: tax rises or spending cuts in at least some other areas.”

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