National Insurance cut for Scots could be wiped out by SNP tax rises
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The Chancellor’s National Insurance cut for more than two million working Scots could be wiped out by SNP ministers announcing more tax rises next month, Alister Jack has warned.
Around 2.4 million Scots are expected to benefit by an average of £340 when the main rate of National Insurance is reduced from 12 per cent to 10 per cent across the UK on Jan 6.
But Humza Yousaf’s Government opposed the cut and Mr Jack expressed concern that they could reverse it by unveiling more income tax rises in next month’s Scottish Budget.
The Scottish Secretary warned that the SNP making Scotland the highest taxed part of the UK had already led to slower economic growth rates and skilled workers being reluctant to move north of the Border.
Jeremy Hunt’s Autumn Statement will lead to the Scottish Government getting an extra £545 million of spending money over the next two years, including £233 million in the current financial year, under the Barnett formula.
But Shona Robison, the SNP finance secretary, admitted in May that the Scottish Government’s day-to-day spending “could outstrip our funding” by £1 billion in 2024/25.
Anyone in Scotland earning more than £27,850 pays more income tax than if they lived south of the Border. Those earning a £50,000 salary pay almost £1,500 per year extra.
Mr Yousaf has previously promised to consider introducing a new 44 per cent rate charged on income between £75,000 and £125,140.
Ms Robison said the Autumn Statement was the “worst-case scenario” for Scotland’s finances, adding: “The cut to National Insurance shows the UK Government has the wrong priorities at the wrong time, depriving public services of vital funding.”
But Mr Jack argued that the Scottish Government should cut out “waste”, citing the spending on a series of Civil Service papers promoting independence.
‘That is a concern’
Asked if he was concerned about the Chancellor’s tax cuts being “undone” when the Scottish Budget is unveiled on Dec 19, he said: “Yeah, I think that is a concern.
“I think making Scotland the highest taxed part of the United Kingdom is a mistake and we’ve seen over the last four or five years the growth rates in Scotland have been slower than the growth rates across the UK.
“And I strongly feel that we should be encouraging more nurses and doctors and policemen and women to want to be employed in Scotland and not creating this differential which puts them at a disadvantage. I am completely against that.”
The Scottish secretary said employers had privately raised with him concerns about the cross-Border tax gap and “how much more difficult it is for them to attract good quality people”.
Mr Hunt also unveiled £80 million to expand a Levelling Up programme in the Western Isles, Argyll and Bute, Dundee, and the Scottish Borders.
A further £20 million is to be spent to support the development of infrastructure for the Corran Narrows ferry crossing in the Highlands.
Mark Kent, the chief executive of the Scotch Whisky Association, said the industry was “raising a dram” to the Chancellor’s decision to freeze alcohol duty.
But Sean Cockburn, the chairman of the Chartered Institute of Taxation’s Scottish technical committee, warned an anomaly would continue that means Scots pay a 52 per cent marginal rate of taxation on earnings between £43,663 and £50,270.
