The Scottish National Party (SNP) has sought to draw a dividing line with Labour in a bid to regain lost ground ahead of next year’s general election.
The Scottish Government announced significant tax increases which it claimed would help increasing funding for public services in a stark contrast to Labour’s policy of seeking to reduce the overall tax burden.
It comes as the SNP has repeatedly sought to paint Sir Keir Starmer and his Scottish counterpart Anas Sarwar as being insufficiently radical, claiming their policies in office would be similar to the Conservatives’.
Shona Robison, the deputy first minister, said: “Taking a different, progressive course on income tax in Scotland means in 2024-25 we estimate we will have around £1.5bn of additional revenues compared to if we had followed UK Government tax policies.”
Opinion polls suggest the SNP has lost support among voters since the resignation of Nicola Sturgeon and the start of a criminal investigation into the party’s finances.
Internal projections suggest that if a general election took place now, the party would win no more than 35 seats, down from 48 at the last election.
But if the swing against the SNP were as large as it was in October’s Rutherglen and Hamilton West by-election, party strategists believe it would be left with just 10 MPs, i understands.
Scottish Labour has sought to argue that the SNP has neglected the importance of growing the country’s economy. A party source said: “It’s not left wing to simply raise taxes and choke off economic growth.”
Michael Marra, Scottish Labour’s finance spokesman, said: “This is a chaotic budget from an incompetent Government that will leave ordinary Scots paying more and getting less in return. The SNP’s mismanagement of our public finances has left us with a massive gap to be filled – that is an SNP waste gap, an SNP incompetence gap and a huge SNP growth gap. If our economy had kept pace with other parts of the UK it would now be £8.5bn larger.”
Analysis: SNP caught in tax trap
Raising taxes in order to give more money to public services is a perfectly respectable policy for any left-of-centre government.
But the SNP-led Scottish Government has found itself in a position where it is increasing tax rates for some groups to their very limit – even while carrying out painful spending cuts.
Humza Yousaf‘s party is keen on pointing out the many compromises that Sir Keir Starmer is making in his pursuit of power at Westminster.
The SNP argues that it is the only true progressive choice – and the Scottish Budget which raises the top rate of income tax to 48 per cent while introducing an extra 45p band as well is evidence that it is willing to act.
However, economists predict the money raised from this tax raid will be hugely limited as higher earners choose to work less, step up their efforts to avoid tax or leave Scotland altogether. After all, the close economic and cultural links within the UK mean it is easy to move.
And cuts are coming too. The housing budget is being reduced by £200m a year, NHS funding is growing more slowly than elsewhere and councils have complained of having to make savings while they are banned from increasing council tax.
Scotland’s additional tax burden does not fall only on the richest. Those earning £43,663 – more than the average salary, but not by a huge amount – face a marginal rate of 42 per cent. The country’s income tax regime is ever more complex.
The SNP is trying to tweak its way out of a fiscal hole. But more hard choices lie ahead.