Nicola Sturgeon: Income tax rise for top earners 'daft'

23 March 2016

Raising the top rate of income tax for Scotland's highest earners would be "reckless and daft", the first minister has insisted.

Nicola Sturgeon was speaking during the final first minister's questions before the election.

Labour leader Kezia Dugdale had accused her of refusing to "reverse George Osborne's tax cuts for the very rich".

And Liberal Democrat leader Willie Rennie said Ms Sturgeon's "big idea" on tax was to do "literally nothing".

Tory leader Ruth Davidson used the session to criticise the Scottish government's named person scheme.

The Scottish Parliament is due to be given wider powers over income tax rates and bands from 1 April of next year.

Ms Sturgeon confirmed on Tuesday that the SNP would not adopt UK government plans to raise the starting point at which workers pay the 40p income tax rate from about £43,000 to £45,000 next year.

And she said the basic rate of 20p would be frozen for the full five years of the next Scottish Parliament term, with no increases in the 40p and 45p rates next year.

But she did not propose raising the income tax rate paid by those earning more than £150,000 from 45% to 50%, as has been proposed by Scottish Labour.

'Made her name'

Instead, Ms Sturgeon insisted that no taxpayers would see their income tax bill rise if the SNP wins the election on 5 May.

Ms Dugdale told the Holyrood chamber that Ms Sturgeon had previously said it was "right that those with the broadest shoulders pay a little bit more".

Ms Dugdale added: "This is the first minister who made her name as the anti-austerity champion. She went down to England and said she would stand up to George Osborne's tax cuts.

"Yet the minute she gets the powers back home, the first minister chooses not to act."

Kezia Dugdale accused the first minister of failing to use Holyrood's new powers

Ms Dugdale said the STUC had described the SNP's tax proposals as "timid" and "difficult to fathom", and that changes made by HMRC had made it harder for the highest earners to avoid paying tax.

She asked: "If the SNP can't summon the courage to propose major progressive change at this moment in time, will they ever?"

And she said hearing the first minister "arguing that Scotland can't go it alone on tax really takes the biscuit."

Ms Sturgeon said she would "leave it to Labour to indulge in political gestures" and would instead "get on with putting forward the proposals that will see this country governed fairly and progressively".

The first minister said it would be "politically easy" to raise the top rate, as the move would only affect about 17,000 people in Scotland.

Willie Rennie has called a 1p increase in the Scottish rate of income tax to raise funds for education

But she pointed to research which suggested that if 7% of Scotland's top tax payers left the country in order to avoid paying an increased income tax rate, Scotland would lose £30m a year in tax revenues.

Ms Sturgeon added: "Doing it in the face of analysis that says that right now it could actually reduce the amount of money we have to invest in our National Health Service and our public services would not be radical, it would be reckless. It would not be daring, it would be daft.

"So we will not do it straight away. Instead we will continue to consider it in light of our experience and analysis, and in the meantime we will put forward fair, reasonable and progressive tax proposals.

"We will ask the better off in our society to shoulder a bit more of the burden, and over the life of the next parliament our proposals, local and national, will raise an additional £2bn of revenue we can invest in our National Health Service, in our public services and in mitigating the impact of Tory austerity."

Ruth Davidson questioned whether parents would be able to opt-out of the named person scheme

Like Labour, the Scottish Liberal Democrats have called for an immediate 1p raise across all income tax bands in Scotland in order to raise £475m for education.

Mr Rennie asked Ms Sturgeon why, "after waiting 80 years to get these powers, she has been so timid with them".

He added that the SNP had said its tax policies would raise a further £1bn in additional revenue, yet "no taxpayer will see their bill increase".

Mr Rennie said: "If nobody pays any more, no government can spend any more. That means the opportunity to transform education is missed, it means nursery education targets will be missed, the attainment gap in schools will keep being missed."

Named person

Meanwhile, Ms Davidson said the SNP wanted to "impose a named person on every child in Scotland, over the heads of parents, against the wishes of the majority of this country, and against the concerns of many, including the police, who believe it will take resources away from the most vulnerable families who need it most."

She asked the first minister to "make it absolutely clear" whether parents who do not agree with the scheme would be able to stop their child from having a named person, and withdraw their child from all named person provision.

Ms Sturgeon said named person was a "good and sensible entitlement" and "not an obligation".

She added: "It helps families get the support they need from services when they need it, and it does not in any way, shape or form replace or change the role of the parent or carer, or undermine families."

Ms Davidson responded: "Named person legislation is so sweeping and now so unpopular that it is no wonder that the first minister is trying to spin her way out of it.

"But isn't it dishonest to suggest that a parent choosing not to engage with a named person is the same thing as being able to stop their child having one imposed in the first place?"

Ms Sturgeon insisted: "The fact is children and parents are not legally obliged to use the named person service or take up any of the advice or help that is offered to them, but it will be available to them if they need it at any point in the future."