SCOTTISH high earners will pay £400 more income tax than those in England next year after the SNP abandoned a manifesto pledge to cut a budget deal with the Greens.

Finance Secretary Derek Mackay confirmed he would freeze the threshold for the 40p rate at £43,000 in 2017/18, after previously proposing to raise it by inflation to £43,430.

The Tory government at Westminster has set the threshold at £45,000 elsewhere in the UK from April, meaning a £400 higher bill in Scotland for those earning more than £45,000.

Read more: Sturgeon caught off guard by business rate row

The change, which takes the extra income tax raised in Scotland to £108m, came just a day after business leaders warned higher taxes north of the border could be “highly dangerous” for the country's struggling economy and deter investment.

The freeze was the price extracted by the Scottish Greens for their support for the Budget Bill, and followed weeks of haggling between Mr Mackay and Green co-convener Patrick Harvie since the Scottish Government’s draft budget appeared in December.

In return for their votes at Holyrood, the Greens also secured extra funds for councils, which had faced cuts of £330m but now get an extra £160m to spend as they see fit, although this still leaves them with cuts of £170m.

Around 370,000 people in Scotland currently pay the 40p rate, however the freeze means more will be drawn into the higher band as wages rise, a process known as fiscal drag.

The SNP’s Holyrood manifesto promised to freeze the 40p threshold in real terms, meaning a rise in line with inflation, but it will now be frozen in cash terms.

The Tory government plans to raise the 40p threshold to £50,000 by 2020.

If the SNP kept the Scottish threshold frozen at £43,000 till then, it would mean Scots earning £50,000 would pay £1400 more in income tax relative to England.

Read more: Sturgeon caught off guard by business rate row

The Greens said the party wanted even more radical tax measures in future budgets.

Presenting the figures to Holyrood, Mr Mackay also announced an extra £25m for Police Scotland and £35m for Scottish Enterprise.

He said the revised budget, the first to use new devolved powers over tax thresholds, would increase additional spending on public services from £700 million to £900 million.

However it was the tax changes which were at the centre of a heated debate in which other parties ferociously attacked the Greens and SNP.

Praising the “constructive approach” of the Greens, Mr Mackay said: “This change protects basic rate taxpayers while generating an additional £29m of revenues in 2017/18.

“And it ensures that 99 per cent of taxpayers on the same income this financial year will not be paying any more income tax in the next financial year

“These proposals balance the need to raise additional revenues, whilst asking the highest earners to forego a significant tax cut at a time of UK Government austerity.

“However, in return for this contribution Scottish taxpayers will continue to benefit from significant investment in our public services.

“This includes increased investment in the NHS, free prescriptions, free personal care, free higher education, no business rates for 100,000 small businesses, investment in reducing the attainment gap and the doubling of free childcare.”

Scottish Labour leader Kezia Dugdale accused the Greens of being “a fig leaf” for SNP cuts and propping up the government to get another independence referendum.

She said: “To accept anything less than bold use of this Parliament's tax powers is an astonishing and deeply disappointing revelation from the Greens.

Read more: Sturgeon caught off guard by business rate row

"This is the truth, nationalism first, austerity second, and somewhere down the list of credentials you might just find the environment."

The Greens had "abandoned any claim to be a party of the progressive left", she said.

Tory finance spokesman Murdo Fraser said the SNP had swallowed the Green “hard left, high tax agenda” and hard working Scottish families would suffers as a consequence.

He said Mr Mackay could have taken a Tory path of lower taxes and economic growth, but had instead embraced the “anti-growth, anti-business agenda of the Green Party”.

He said: “What a pity, what a tragedy for Scotland that he chose to throw in his lot with the lentil munching, sandal wearing watermelons on that side of the chamber.

"He and his Government have shown contempt for the views of the business community. They may as well have put up a sign at the borders that says 'Closed for business'."

LibDem leader Willie Rennie said the Greens had promised a "greener and bolder Parliament", but delivered a "grey and timorous" one.

"We should no longer listen to lectures from Patrick Harvie about austerity and compassion after today's concessions."

Visibly upset by the criticism heaped on him and his party, Mr Harvie said: “The Greens are the only political party that has managed to persuade the Government to make any changes at all. Has Labour's posturing saved a single council service, prevented a single cut?

"The Greens have made more of a difference in the real world, in this one Budget debate, than Labour have made in 10 years of opposition. I think it's a position we should be proud of."

Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: “Having a higher burden of taxation in Scotland than in the rest of the UK will ultimately drive away investment and cost jobs. This deal will do nothing to lay the foundations for future business success"

David O’Neill, president of the council umbrella group Cosla, said: “This is still not a good result, better but not good.”

After the debate, the government won a Stage One vote on the principles of the Budget Bill by 67-59, with the SNP and Greens allied against Labour, the LibDems and Tories.

The deal between Mr Mackay and Mr Harvie means the Greens will also support the next two votes on the budget, and abstain on the Scottish Rate Resolution setting tax rates 2017-18.