Labour plans for Scotland income tax hike 'will hammer family finances'

Leader of Scottish Conservatives Ruth Davidson says proposal would 'hurt every single taxpayer in the pocket'

Ruth Davidson claims Labour’s proposals are not fair (Getty Images)

Labour’s plans to increase income tax for more than a million Scots will “hammer family finances” and could lead to a mass exodus of workers to other parts of the UK, the leader of the Scottish Conservatives has claimed.

Ruth Davidson said Labour’s proposal to use new powers coming to Holyrood to increase the Scottish rate of income tax by 1 per cent would “hurt every single taxpayer in the pocket” and would lead to workers paying more in tax than in other parts of Britain.

However, Labour leader Kezia Dugdale said that raising tax for workers earning over £20,000 a year was the only way to prevent swingeing cuts to council budgets being pushed through by the SNP government. Describing the policy as a “radical alternative” to austerity, she said the tax hike would raise up to £500 million while protecting the lowest paid workers, who would qualify for a £100 rebate.

MSPs at Holyrood will have a chance to vote on the proposal on Wednesday after Labour tabled an amendment to the SNP’s Budget calling for a Scottish rate of income tax to be set at 11p. The policy has been welcomed by the GMB and Aslef unions, but the SNP and the Tories dismissed the idea.

“These policy proposals send a message. And if that message is that Scotland should be the highest-taxed part of the UK – then don’t be surprised if businesses and people opt to find a different part of the UK in which to operate,” Ms Davidson said in a speech in Edinburgh.

Conservative finance spokesman Murdo Fraser also questioned how the proposed rebate scheme would work, warning that it would result in a “ridiculous merry-go-round where first Labour takes money off the lowest-paid and then gets the council to hand it back”.

With the Scottish rate of income tax due to come in on 6 April, Deputy First Minister John Swinney has opted to keep payments in Scotland the same as the rest of the UK. Councils say his proposed Budget for 2016/17 will result in cuts of £350m – a hole which Labour says could be plugged with extra funds raised through a modest tax rise.

Launching the policy, Ms Dugdale said that while “some of us will pay a little more”, the increase in tax was an investment in the future as it would help protect Scotland’s schools and public services.

Addressing First Minister Nicola Sturgeon directly, she added: “I have listened to you for 20 years tell Scotland that more powers means fewer cuts. In the choice between using our powers and cutting our nation’s future, we choose to use our powers. What will you choose?”