Holyrood 2016: Think tank analyses party tax plans

Tax folderImage source, Thinkstock
Image caption,
New tax raising powers are heading to Scotland in April 2017

A left-leaning think tank looked at the tax promises of Scotland's parties and concluded that Scottish Labour's plan would raise the most revenue.

The Institute for Public Policy Research (IPPR) Scotland said the party could generate between £1.1bn and £1.2bn by 2020/21.

SNP income tax plans would raise £300m and the Scottish Conservatives zero.

Scottish Lib Dem tax pledges could result in added revenue of £750m and the Scottish Greens of up to £950m.

New finance powers - including setting the rates and bands of income tax on non-savings and non-dividend income - are heading to Scotland in April 2017.

Each of the five Holyrood parties have been outlining their tax and spend plans ahead of the Scottish Parliament election on 5 May.

The SNP has pledged to freeze tax rates, and will not implement UK government changes to the threshold at which people start paying the 40% tax rate.

It has also promised to raise the personal allowance to £12,750 by 2020/21 by setting a zero rate - a move which the IPPR says will cost £130m a year.

Scottish Labour and the Liberal Democrats want to increase income tax by 1p, while Labour would also raise the additional rate for top earners to 50p.

The Tories have pledged to match UK government tax plans and therefore will raise no additional revenue, the IPPR said.

The Greens have announced plans to create new tax bands and increase the additional rate to 60%.

In March, the think-tank calculated the next Scottish government would face a £2bn annual spending gap by 2020.

Its latest research compares tax proposals already announced by the parties to what would be raised if they followed UK tax plans, assuming the UK government raises the higher rate threshold to £50,000 by 2020/21 as planned.

Russell Gunson, director of IPPR Scotland, said: "Our analysis is the first time we've been able to show how much each of the parties are seeking to raise in additional tax revenue.

"With billions of pounds of spending cuts and benefits coming to Scotland over the next few years, the balance of tax rises and spending cuts proposed by the parties needs to be front and centre of the plans they will take to the country to vote on next month.

"Ahead of manifestos being published over the course of this month, the parties need to be clear with voters as to how much, if any, tax they hope to raise - and what scale of public spending cuts and reform of our public services they're proposing."

How have the parties reacted?

Scottish Labour public services spokeswoman Jackie Baillie said: "This expert intervention shows that only Labour has a credible plan to use the powers to stop the cuts to schools and public services.

"The SNP's refusal to tax the richest will see the poorest lose out."

SNP Finance Secretary John Swinney said: "This report shows that it is only the SNP that are putting forward balanced, reasonable and fair tax proposals that will support public services like our NHS whilst protecting households budgets."

He added that it showed "Labour's plans are a tax grab on some of the least well off in our society", while the Tories "are continuing to hand out tax breaks to the rich at the same time as they are cutting public services".

Liberal Democrat leader Willie Rennie said the report showed its tax plans are "progressive", while Scottish Greens co-convener Patrick Harvie said it demonstrated its proposals are "far bolder than the SNP's", and tackle inequality, "while Labour's do not".

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