Council tax rise could wipe out budget savings for low earners, MSP warns

© PA
First Minister Nicola Sturgeon and Finance Secretary Derek Mackay arrive to deliver his draft Budget for 2018-19 at the Scottish Parliament.

Lower earners could see any savings from the Scottish Government’s new starter rate wiped out by council tax rises, a local MSP has warned.

The most that can be saved from finance secretary Derek Mackay’s proposed changes to income tax rates and bands currently stands at £20 – or 38p a week.

The starter rate of tax will apply for the first £2,000 after the personal allowance amount and has been set at 19p in the draft budget.

However, Mr Mackay’s plans also allow local authorities to increase council tax by as much as 3% from April.

This means the rate paid by the owner of a Band A property in Dundee could increase by as much £24.81 next year.

Elsewhere, tax payers could see a rise of £22.08 in Angus, £23.03 in Fife, and a hike of as much as £23.62 in Perth & Kinross.

Bill Bowman, who serves as the Scottish Conservatives’ tax spokesman, claimed the plans amounted to a real-terms cut to council budgets that would put pressure on local authorities to find their own money to fund services.

He said: “An admission that councils will be allowed to increase council tax by 3% has foisted the responsibility for this increase on local authorities.

© DC Thomson
Bill Bowman MSP.

“In Dundee, this will cause an SNP administration to cut crucial council services if they don’t pursue this strategy, which will penalise all sections of society.

“This means any in the area will end up paying more in income and council taxes, while receiving less when it comes to public services.”

However, councillor Willie Sawers, finance spokesperson for Dundee City Council, said Scotland continued to offer “the best deal for taxpayers anywhere in the UK”.

He said: “This is what real progressive government looks like – and opposition parties should sit up and take note.

“People in Scotland already benefit from a significant range of policies that the Tories at Westminster do not provide for the rest of the UK – leaving Scottish taxpayers as the only ones to benefit from a strong social contract.”

A Scottish Government spokesman said: “Overall, the wide range of free to access public services available in Scotland ensures the best deal for Scottish taxpayers.

“Our new, fairer, income tax policy will protect the 70% of taxpayers who earn less than £33,000 a year and ensure they pay less tax next year for any given income whilst asking those earning more than £33,000 to pay a proportionate amount more to support our public services.”