MSPs agree income tax rate freeze despite ‘68,000 will pay more’ warning
The MSPS has agreed to freeze income tax rates for the next financial year despite concerns that nearly 70,000 Scots will pay more due to bracket adjustments.
SNP Public Finance Minister Tom Arthur said ‘the majority of Scottish taxpayers will pay less income tax than they would elsewhere in the UK for the fifth year in a row’.
Under plans, agreed before final budget approval, there will be no change in income tax rates in the 2022/23 financial year.
The starting and base rate bands will increase in line with inflation, while the top and top rate thresholds will remain frozen in cash terms.
Mr Arthur said his government recognized the “vital and dynamic role” the tax will play in a vision to “build a fairer, greener and more prosperous Scotland”.
He said: “The key message from stakeholders was the need for certainty and stability in the tax system.
“At a time when the cost of living is rising, taxpayers in lower income brackets should not pay more taxes. This is why we have not proposed any changes to income tax rates in 2022/23. »
According to the Scottish Tax Commission, the rate freeze will bring in an additional £106million to the public purse.
The minister told MSPs that income tax made up ‘30% of the Scottish budget’ and stressed that a UK government is in ‘chaos’ and ‘presiding over the most serious cost of living crisis for a generation”.
Scottish Conservative finance spokeswoman Liz Smith warned the adjustment of the brackets would force “68,000 people to pay more tax”.
She added: “We think we have to be extremely careful about any policy that will lead to some divergence.
“There are serious issues about the amount of revenue we actually don’t get because of the policies of the current Scottish Government.”
Scottish Labor’s Daniel Johnson welcomed the move to freeze income tax rates, but called on SNP ministers to consider using the “other taxing powers” that have been devolved.
He said: “I think the Scottish Government is right to essentially leave rates unchanged and raise the thresholds in line with inflation.
“At a time of both seeking to strengthen the recovery and mitigate economic damage, I think raising tax levels would be wrong.”
Labour’s finance spokesman said the strategy was in “sharp contrast” to the UK government, which is pushing ahead with plans to raise National Insurance contributions to pay for health and social care improvements.
Mr Johnson said: ‘While I broadly support their incremental approach, I would stress that not all of the impacts of the levels are incremental and go as far as they could.