SCOTS paid almost £750 million more in income tax in 2018/19 than they did the year before, officials estimate, following changes introduced by SNP ministers.
A National Audit Office report confirmed Scotland’s estimated income tax revenue was around £11.7 billion in 2018/19, compared to £10.9 billion the previous year.
The increase followed an overhaul of the tax system, with the SNP introducing two new bands and altering the higher and top rates. This meant people earning over £26,000 paid more income tax in Scotland than if they lived south of the border. Critics say this makes Scotland the highest-taxed part of the UK.
But a Scottish Government spokeswoman said: “Under our progressive approach, 55 per cent of Scottish income taxpayers pay less income tax than people living in the rest of the UK, whilst raising additional revenue to support our economy and invest in the delivery of first-class public services. Whilst higher-earning taxpayers are asked to pay more, we are able to provide the widest set of free-to-access public services anywhere in the UK.”
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Many factors can result in changes in revenue over different years, including employment and earnings growth. Sluggish economic growth was blamed for an income tax take of £941m less than forecast in 2017/18.
The latest figures came as Scottish ministers accused their UK counterparts of a deliberate attempt to frustrate devolution.
A row broke out after it emerged the Scottish Government may have just weeks to draw up tax and spending plans for the coming year – or face a financial cliff-edge.
Chancellor Sajid Javid yesterday announced the UK budget - including the Scottish Government’s allocation - will be set on March 11, following a delay in the run-up to the general election.
Under the normal process, this leaves Mr Mackay with just three weeks to get his tax and spending plans for 2020/21 through Holyrood. He had planned to set out his initial budget in December.
Mr Mackay insisted the UK Government had given “no prior notice before announcing their budget date, showing complete disrespect for the Scottish Parliament and our budget process”.
Meanwhile, a spokesman for the Scottish Government said “the single biggest danger” was that officials would be unable to collect income tax in Scotland if rates are not passed by March 31.
However, he later stressed: “Don’t misunderstand me – I’m not suggesting in any way that the Government thinks this is an outcome that is at all possible to actually envisage in the real world. It’s simply the reality of the Act. We have to get this done.”
He added: “This is not the way people foresaw devolution and the relationship with Westminster working – where, without a care for the realities of Scottish fiscal processes, the UK Government has set out a timeline that looks almost deliberate in its attempt to frustrate devolution.”
Mr Javid has promised a post-Brexit spending spree when he unveils his proposals.
Scotland’s 32 local authorities are required to set their budgets and council tax rates by March 11 but will not know at that point how much cash they will receive from the Scottish Government.
Council umbrella body Cosla described the March 11 date as “extremely worrying” and argued it puts essential services at risk.
Mr Mackay said: “It would be unthinkable if the budget in Scotland wasn’t passed because that would bring about terrible calamity for our public services, communities and people of Scotland.”
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With Holyrood having to pass its own budget by March 31, he said a “exceptional, bespoke process” would be needed.
The Chartered Institute of Taxation warned the Scottish budget process will have to take place “at breakneck speed, with little room for manoeuvre”.
A UK Treasury spokesman said: “Nothing stops the Scottish Parliament from passing their budget before the UK budget. We are working with the Scottish Government as part of an agreed process to provide the information they need to prepare their budget.
“At the spending round, we announced that the Scottish Government’s block grant will increase by £1.2 billion next year.”
The Treasury said it informed Scottish Government officials as soon as possible once the Budget date was announced.
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