Scottish taxpayers are set to face a double tax misery this autumn. Scots will face a tax rise from both the Labour government in Westminster and the SNP government in Holyrood, as both parties struggle to plug the financial gaps in their spending plans.
There are fears Rachel Reeves will not take Scots’ disproportionately heavier tax burden into account (Image: Getty)
Scottish Secretary Ian Murray said Chancellor Rachel Reeves will not take Scots’ disproportionately heavier tax burden into account when she unveils her Autumn Budget on October 30.
It is thought that Ms Reeves could target capital gains and inheritance which would apply across the country.
Just over a month after Ms Reeves’ first Budget, Shona Robison, the SNP Finance Secretary, will unveil the Scottish Budget on December 4. This will include the income tax rates and bands on earnings for the 2025/26 financial year. Last week, Ms Robinson already announced a painful £500 million worth of cuts, after an astonishing near-£1 billion shortfall in public finances.
Ian Murray said Scots unhappy with the double tax nightmare should blame the SNP (Image: Getty)
The Scottish Fiscal Commission said the SNP’s anticipated hike in public sector pay deals was part of the problem. The financial watchdog warned that much of the shortfall could be tied to the SNP’s own spending decisions.
More than 2.7 million people in Scotland pay tax. Thanks to a set of new income tax bands, anyone on more than £28,867 north of the border will pay more income tax than someone with the same earnings elsewhere in the UK.
Mr Murray admitted that the Chancellor wouldn’t show the hard-pressed Scots leniency.
The new Scottish Secretary said: “That’s the way devolution works, I’m afraid.
“The devolution of income tax is for the responsibility of the Scottish Government to determine, which is obviously the determination of the voters in terms of what they wish to have as a government.”
Mr Murray added: “And the other taxes that you’ve talked about are reserved, and therefore it’s up to the Chancellor about what might happen on Oct 30.”
He said that Ms Reeves had to make some difficult choices on tax rises or there could be a “Liz Truss situation number two”.
The Labour MP added that Scots unhappy with the double tax nightmare should blame the SNP, suggesting that the Holyrood government’s previous tax decisions had led to less money being generated.
The Scottish Secretary said: “There’s a real problem in terms of the way they’ve managed both the economy and the fiscal situation.”
The SNP’s Shona Robinson has already announced a painful £500 million worth of cuts (Image: Getty)
Official figures show that the SNP’s income tax rises since 2017 will have brought in an extra £1.5 billion for the public purse by the end of the current financial year.
David Phillips, an IFS associate director, wrote that the SNP was “not blameless” in the financial crisis facing Scots. He said that the SNP government could have held back funding over the higher-than-expected pay deals.
He said: “A decision to freeze council tax also cost almost double the amount raised from increases in income tax rates on higher earners. Tax policy decisions therefore reduced rather than raised revenues, increasing the pressure on Scotland’s public finances.”
This week, a leading academic, David Heald, emeritus professor at the University of Glasgow, warned SNP ministers that they will find it “very difficult” to raise more money through higher taxes to fill gaps in Scotland’s public finances.
