NICOLA Sturgeon’s economic advisers have warned her against reintroducing the 50p top rate of income tax in case high earners quit the country.
A paper by Chief Economist Gary Gillespie and the First Minister’s economic advisory council said raising the rate from 45p to 50p for those earning over £150,000 was too risky.
However it suggested a smaller rise, to 46p or 47p, might be possible in Thursday's draft budget.
Although only 20,000 Scots pay the top rate, it generates 10 per cent of income tax revenue.
In discussion paper on tax last month, SNP ministers set out a series of scenarios that included a 50p rate.
However Mr Gillespie said “substantial divergence” from the 45p rate in the rest of the UK could prompt Scots to leave the country.
If all those liable for a 50p rate paid up, it could raise an extra £145m a year, but if large numbers took action to avoid it, it could lead to a £24m a year drop in revenue.
Mr Gillespie said: “There is likely to be a revenue and policy risk associated with increases to the Additional Rate that result in a substantial divergence from the rest of the UK, but smaller changes could alleviate the risks.”
A Scottish Tory spokesman said: “Changes at the higher level could lead to a drop in receipts. Given the SNP says it is hiking taxes to generate millions extra, middle earners will fear they’re in the firing line.”
Labour MSP James Kelly added: "The SNP look all over the place on tax. After weeks of suggesting it planned radical use of its powers, the government is now hinting it doesn’t want to risk asking high earners to pay a little more. You can't stand up for the many if you refuse to stand up to the few."
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