Cause for optimism as McKay raises taxes for the first time since devolution
Holyrood’s finance secretary has vowed to rob the rich to pay the poor after announcing the biggest rises in income tax will affect higher earners.
Taxing higher earners will enable the Scottish Government to mitigate against the worst excesses of Westminster’s austerity agenda, said Derek Mackay.
The higher rate of income tax will rise from 40p to 41p and the top rate from 45p to 46p in the pound while those earning more than £24,000 a year will also see their tax rise by a penny to 21p.
Mackay is also bringing in a new starter rate of income tax at 19p.
The finance secretary insisted the changes, which he said would raise an additional £164m, were necessary to "mitigate UK budget cuts, protect our NHS and other public services, support our economy and tackle inequality in our society."
He said the tax reforms would make "Scotland's income tax system even fairer and more progressive" and insisted no-one earning under £33,000 would pay more tax.
John Downie, director of public affairs for the Scottish Council for Voluntary Organisations (SCVO) welcomed the introduction of tax to raise additional revenue.
But he warned: “We must be careful that this divergence from the UK wide system does not have negative implications for Gift Aid, which is a valuable source of income for so many charities across the country.
He added: “We welcome the decision to remove the public sector pay cap, which will help people whose living standards have been squeezed over the past decade.
“But the budget fails to recognise the many third sector workers delivering public services who are not even being paid the living wage."
Mackay also announced the first investment in a new £50 million fund to tackle child poverty.
John Dickie, director of Child Poverty Action Group (CPAG) in Scotland, called the move to increase taxation a “welcome step.”
He added: “With over one in four children growing up in poverty in a country as wealthy as Scotland it is a welcome step forward that the draft budget makes the case for use of tax powers to harness that wealth to prevent poverty.
“As a society we really do need to invest more in the social and economic infrastructure that is needed, along with a fairer labour market, to end child poverty, and income tax is one vital tool to ensure we have the resources to make that investment."
Mackay also said the government would invest more than £100 million to mitigate UK welfare reform including so-called bedroom tax reversal and the Scottish Welfare Fund.
And extra funding will be made available to support the "landmark step" of increasing Carer's Allowance, which will be delivered by summer 2018 and backdated to April.
The budget makes the case for tax powers to harness wealth to prevent poverty - John Dickie
Jane McPartlin of the Carers Network called the move “positive” but said carers were still waiting to see how much the increase will affect their daily lives.
Meanwhile campaign group Sustrans Scotland welcomed an £80m investment for active travel calling it a “bold statement of intent” for the country.
Sustrans Scotland director John Lauder said: "The investment ensures that 10% of the trunk roads budget is spent on walking and cycling projects and builds on the successes to date in programmes for walking, cycling and improvements to local communities.”