TOP earners in Scotland are to pay even more income tax than their counterparts in England under a budget deal between the SNP and Scottish Greens.
Ahead of a key Holyrood vote today, the Greens announced they had agreed “new powers over income tax for high earners” with Finance Secretary Derek Mackay.
It is understood the deal - which will be announced to parliament this afternoon - could involve freezing the threshold for the 40p rate of income tax at £43,000 next year.
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The SNP had originally proposed raising it to £43,430 in line with inflation, despite the UK Tory government raising it to £45,000 next year south of the border.
If Mr Mackay does freeze the threshold at £43,000, it means those earning £45,000 or above would pay £400 more in income tax in Scotland than south of the border.
Around 360,000 people in Scotland currently pay the 40p rate of income tax.
However freezing it would mean even more moving into the higher rate bracket as a result of rising wages - a process known as fiscal drag.
Read more: Nicola Sturgeon says Tory arrogance "knows no bounds" after second referendum dismissed
The Greens said they had secured the changes in order to find more money for council services, which face cuts of around £350m, according to the umbrella group Cosla.
Mr Mackay confirmed on Twitter that he had reached a deal with the Greens "for all stages of the budget to pass".
Full details will be announced to MSPs on Thursday afternoon.
A spokesperson for the Scottish Greens said: “A substantial package of funding for local councils to spend on local priorities is welcome. Opposition parties have a responsibility to make a difference, and that’s exactly what the Greens are doing.”
The agreement follows a last-minute threat by the Scottish Greens to withdraw support for the budget vote today.
Read more: Nicola Sturgeon says Tory arrogance "knows no bounds" after second referendum dismissed
MSP Ross Greer told BBC Radio Scotland that the Government might lose its Stage One vote on the principles of the Budget Bill, but there would still be time to "go back to the negotiating table and try to fix this".
Business leaders yesterday warned increasing the tax gap across the border could prove “highly dangerous” to Scotland’s struggling economy by deterring investment.
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