THE Scottish Greens are moving closer to a deal with the SNP on next year’s budget, raising the prospect of higher income tax rise for top earners.

Green sources last night indicated they were “hopfeul” of extracting concessions on tax from Finance Secretary Derek Mackay in the coming weeks.

With the SNP having 63 MSPs in a parliament of 129, the government needs the support or abstention of at least one other party to secure its 2017-18 budget.

Read more: Ministers accused of treating Holyrood 'with contempt' over missing Bills

Until now, the LibDems had been seen as the most likely party to cut a deal.

However with Nicola Sturgeon warning of a second independence referendum, they are now reluctant to side with the Nationalists.

Conversely, the pro-independence Greens are reluctant to leave the SNP in the lurch.

Scottish LibDem leader Willie Rennie, who had asked for £400m of extra spending in the budget, yesterday said there was a “growing gap” between his party and the government.

He told BBC Scotland he was willing to see the budget and government fall, leading to a snap election, despite acknowledging it would not be in Scotland’s interests.

He said: “I believe it is not looking good for an agreement this week. People on the doorsteps and people contacting me... are saying 'Yes, we should have an election' because they would like to get rid of this SNP government. I'm not fearful of an election, although I do not want one, because I don't think it would be in the interest of the country when we're trying to deal with the big challenges of Brexit and also the many other issues round about the economy and education. If we don't get what our voters backed us for in May, then I'm afraid we just have to walk away."

The SNP plan to cut income tax for those paying the 40p rate by lifting the threshold by inflation: from £43,000 to £43,430 in 2017-18 and to around £46,550 in 2020-21.

Read more: Ministers accused of treating Holyrood 'with contempt' over missing Bills

However elsewhere in the UK, the Tory government is raising the threshold to £45,000 next year and to £50,000 in 2020, meaning Scots taxpayers will pay more.

The Scottish Greens want to raise the higher rate to 43p and the top rate for those earning over £150,000 from 45p to 60p.

Mr Mackay and Green MSPs have discussed a possible deal in recent weeks.

A Green source said the SNP were “extremely guarded”, but the Greens were optimistic about a compromise deal.

The source said: “We’re not saying all our tax policies need to be implemented, but we are not in favour of voting through a tax cut for high earners. There’s needs to be some concrete change.”

However the Scottish Government remains wary of raising taxes against a backdrop of weak economic growth and further economic hardship as a result of Brexit.

MSPs vote on the principles of the Budget Bill 2017-18 on Thursday, with the final, decisive vote at the end of next month.

Scottish Tory finance spokesman Murdo Fraser said the budget should prioritise growth with low taxes, yet the SNP Government wanted to make Scotland “the highest taxed part of the UK”.

He said: “If we had matched UK growth over the last ten years, Scotland would have earned an extra £3bn – the equivalent of £1300 per household.

“The SNP now wants to make this even worse. By increasing taxes, their plans will act as a ball and chain on growth, leaving us all poorer.

“Unless the SNP signal they are re-thinking their tax plans, we will be voting against this anti-jobs budget this week. If the budget falls as a result, that will be the Nationalists' own fault.”

Read more: Ministers accused of treating Holyrood 'with contempt' over missing Bills

The council umbrella group Cosla yesterday issued all MSPs with a briefing on the budget, warning £350m of local government cuts would “undoubtedly impact on local services”.

Scottish Labour deputy leader Alex Rowley said: “This is a very serious warning from Cosla. The first vote on the SNP budget is just days away and I urge Mr Mackay to think again about the damage he plans to inflict on our communities.”

The Scottish Government spokesman said the budget would deliver increased investment in education, the NHS and protect low-income households from tax hikes.

The Finance Secretary is currently in active discussions with political parties about the Scottish Budget while considering the detail of propositions received to date and will continue to take forward constructive discussions on Budget plans."