Humza Yousaf has said the Scottish Government could introduce a wealth tax to help cope with the “extraordinary pressures” on the public finances.

The First Minister said it would be wrong to rule out the measure and cited a recent STUC report which proposed raising £1.4billion a year by targeting the richest in society.

“We shouldn’t rules these matters out because we are facing extraordinary pressures,” he said.

Mr Yousaf was speaking after his Programme for Government statement to Holyrood on Tuesday fuelled speculation about tax rises in the budget for 2024/25.

He gave SNP finance secretary Shona Robison the task of using tax powers to ensure the budget was part of the “most progressive tax system in the UK”.

That led to opposition party criticism that the SNP was planning to pick workers’ pockets with income tax increases, with Scotland the highest taxed part of the UK.

On a visit to the Thistle Foundation charity in Edinburgh for people with long term health issues, Mr Yousaf said progressive taxation was a “central belief” for him.

However he also said that if the UK Government cut tax, Scotland would have to consider whether tax divergence with the UK could become problematic.

Previous studies have warned high earners might change their tax residence to south of the border. 

Taking questions from the media, he said: “I want to make sure we continue to have a progressive tax system in Scotland. Those who earn the most, like politicians, should pay the most. That is my central belief.

“When it comes to it, whether we raise taxes or not, that decision will be taken during the budget. We will consider what we need to do in terms of our own budget.

“But we will also need to consider, clearly, what the UK Government does in relation to tax, and that could also influence what we end up doing.

"But we won’t shift away from a progressive tax system where those who earn the most pay the most.”

Mr Yousaf cited a report by Landman Economics for the STUC last year which discussed a series of ways Holyrood could use its existing powers to raise more tax.

These included a new income tax rate of 44p for earnings between £75,000 and £125,140 to raise around £200million a year, which Mr Yousaf has already endorsed.

Another proposal was a 1% annual tax on wealth, including homes and other property, pension wealth, possessions including household contents, jewellery and art.

Applying the levy on wealth above £1m would affect 12% of households and realise around £1.4bn, with the average household affected paying around £8,000 a year.

The report said that if designed as a local rather than  a national tax, it could be created under existing powers, and if work started in 2023 it could be in place by 2026/27. 

The Scottish Greens, the SNP's partners in the joint Government, also advocate a 1% annual tax "on all wealth and assets above the £1m threshold, including property, land, pensions, and other assets".  

Asked if wealth taxes might be good a way to raise more for services without squeezing middle earners, Mr Yousaf said: “I’ve said before when it comes to the issue of wealth taxes, and I refer back to some of the work the STUC has done on that in particular, I’ve said that we should give consideration when it comes to a really tight, tough financial constraints that we are under, we shouldn’t rule wealth taxes off the table.

”We haven’t made a decision on them, but I equally have said that we shouldn’t rule these matters out because we are facing extraordinary pressures.

“And for anti-poverty organisations, social care providers, many others who want us understandably to go further, well we’ve got to be able to find the finances and the resources to do that.”

Asked if his concern about Scotland’s tax regime diverging from the rest of the UK aligned him with Scottish Tory leader Douglas Ross, Mr Yousaf said: “Absolutely not. Douglas Ross has never believed in progressive taxation, much to my frustration.

“I believe in progressive taxation. We will make a decision on that come the budget.”