JIM Murphy has sought to reclaim Labour's place as Scotland's party of social justice by promising to increase taxes on the rich if he becomes First Minister in 2016.

The Scottish Labour leadership frontrunner yesterday pledged to set a 50p top rate of income tax, using powers expected to be announced by the Smith Commission tomorrow, and challenged First Minister Nicola Sturgeon to follow suit.

Labour plan to introduce a 50p top rate of tax across the UK if the party wins next May's Westminster election. However, full control over income tax is expected to be transferred to Holyrood as early as financial year 2017/18.

Mr Murphy's promise raises the possibility of Scotland taxing the rich more heavily than the rest of the UK if the Conservatives remain in power after May.

A number of senior Labour figures have resisted the idea of having two distinct tax regimes within the UK but Mr Murphy said he would press ahead with his plan irrespective of their views.

Asserting Scottish Labour's autonomy from the UK party, he said: "Ed Miliband and Ed Balls can read about it in the newspapers like everyone else."

The East Renfrewshire MP was addressing supporters at the Mitchell Library in Glasgow. He told them: "Labour has created the opportunity to have a more progressive tax system in Scotland than in the rest of the UK.

"What is the point of having that power if we do not use it in order to fund Scotland's priorities, which we see in our communities and in the statistics of deprivation?

"Asking the wealthiest few to pay a little more, we will address the issue that while services are being cut for the least well off, the wealthiest gain from universal benefits."

The proposed tax rise, up from the present top rate of 45p, would apply to 16,000 Scots earning more than £150,000. It would raise up to £250 million.

Mr Murphy said the extra revenue would be used to tackle poverty and fund a reformed version of the SNP's "small business bonus" rates relief scheme, introducing incentives for firms to create jobs. He added: "I hope Nicola Sturgeon joins me today in a commitment to use tax-raising powers to address the inequality and disadvantage which blights Scottish society."

The SNP opposed the Conservative/Lib Dem coalition's decision to cut the 50p top rate to 45p but the party has repeatedly refused to endorse Labour's plan to re-introduce it.

An SNP spokesman said last night: "As a party, we will set out progressive policies on these matters in the run up to the General Election."

Scottish Conservative finance spokesman Gavin Brown said: "Our priority has to be growing the economy, creating jobs and helping Scotland's businesses flourish.

"The very last thing we need is a 50p tax rate which would send a terrible signal to entrepreneurs and those who want to invest here."

Labour entered the Smith Commission talks opposing the full devolution of income tax, fearing it would lead to damaging tax competition within the UK. Gordon Brown has also warned it could undermine the right of Scots MPs to vote on budget issues, if David Cameron succeeds in introducing "English Votes for English Laws".

Despite their concerns, it is understood Labour's negotiators have bowed to pressure from the other parties during Smith Commission talks and agreed to hand Holyrood full control over income tax.

Yesterday a number of Labour MPs continued to voice reservations, with one saying: "God knows what the two Eds think of this as we prepare for a General Election campaign."

However, allies of Mr Murphy, who is the favourite to succeed Johann Lamont, insist he has wide support within the party for using newly-devolved tax powers.

In his speech to supporters, Mr Murphy, who was initially among those wary of devolving income tax in full, said the move would bring "huge opportunities" to Scotland.

He also warned it would stop future Scottish governments from blaming Westminster if budgets were cut. He said he hoped his proposals would win support among both No and Yes voters in September's independence referendum.

Meanwhile the Campaign for Home Rule, a devolution pressure group set up by financier Ben Thompson, said Holyrood should be made responsible for raising all the money it spends.

A study published ahead of tomorrow's Smith Commission announcement argued the parliament should be given sufficient tax powers to raise £44.5billion.

The sum is equivalent to the Scottish Government's present budget plus the cost of benefits and welfare schemes due to be devolved.

Mr Thompson said: "We must build a culture of responsibility across politics in Holyrood, and see a newly empowered Parliament accountable for the decisions it takes, and making better decisions as a result."

Ian Bell: Page 13

Agenda: Page 15