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Scottish Budget: John Swinney confirms no change to tax rates

John Swinney, Cabinet Secretary for Finance, Constitution and Economy gives evidence to the Finance Committee as it continues its scrutiny of the Scottish Fiscal Commission Bill. 02 December 2015. Pic - Andrew Cowan/Scottish Parliament
John Swinney, Cabinet Secretary for Finance, Constitution and Economy gives evidence to the Finance Committee as it continues its scrutiny of the Scottish Fiscal Commission Bill. 02 December 2015. Pic - Andrew Cowan/Scottish Parliament

Scots will see no increase in either income tax bills or council tax payments next year, Deputy First Minister John Swinney has announced.

For the first time ever, Holyrood ministers have to play a part in setting the income tax north of the border, with Mr Swinney announcing it will be fixed at 10p, meaning tax rates will stay the same as they currently are.

In addition, he said council tax rates would be frozen for the ninth year in a row in 2016-17.

Mr Swinney said the announcements, contained in his budget plans for the coming year (PDF link), amount to a “dual freeze on income tax and council tax, helping families week in, week out the length and breadth of Scotland”.

Under changes brought in as part of the 2012 Scotland Act, ministers at Holyrood are required to set a Scottish rate of income tax, which will come into place on April 6.

Income tax will be reduced by 10p in the pound for Scottish taxpayers but they will then have to pay the new Scottish rate.

Mr Swinney said the powers – which will be superseded in 2017 by proposals in the latest Scotland Bill – did not allow him to tailor the tax system to help lower income Scots.Cosla claims councils are facing ‘totally unacceptable’ cutsHe then told MSPs: “There will be no change in the income tax rate next year.I propose that the Scottish rate of income tax will be set at 10p in the pound. The rate people pay next year will be the same rate they paid this year.”

The land and buildings transaction tax, which replaced the stamp duty charge onproperty sales north of the border, will remain the same for most transactions, Mr Swinney added.

The exception to this is for buyers purchasing an additional residential property – such as a second home or a buy-to-let – worth more than £40,000, who will face an addition charge of 3% of the value.

Mr Swinney said this was “proportionate and fair”, adding the new levy “seeks to ensure that the opportunities for first-time buyers to enter the housing market in Scotland remain as strong as they possibly can be”.

The Deputy First Minister hailed his overall budget as a “Scottish alternative to austerity”.

He criticised the UK Government and said: “By 2020 our budget will be 12.5% lower in real terms than when the Conservatives came to power.

“This is the equivalent of one pound in every eight we spend being cut by Westminster by 2020.”

But Jackie Baillie, Labour’s spokeswoman for public services and wealth creation, said Mr Swinney had set out an “election only” budget.

She hit out: “With major new tax and welfare powers coming to Scotland, the Finance Secretary could have used today to outline detailed plans to end austerity and close the gap between the richest and the rest in Scotland.

“The Finance Secretary claims to have delivered on that in his statement but he’s not rejecting austerity, he is simply managing it.

“Scottish Labour are calling for a genuine anti-austerity budget and a long-term plan for Scotland but instead what we have from the SNP is a budget for an election only – short term with all the cuts hidden away.”

Ms Baillie continued: “The Finance Secretary should today have laid out plans across his whole budget for at least three years, we should have seen a Scottish spending review.

“He selected the good news to tell us but hid away the bad. Austerity hidden is not austerity avoided and people deserve to know the truth.”

The Labour MSP said experts had questioned the SNP’s credibility on the economy, with growth, employment and oil prices all down.

She stated: “They’ve told us what budgets they are increasing but not which budgets are being cut. The Finance Secretary says he’s protecting schools but the headline education budget is cut. He says he’s increasing health and in particular social care but at the same time he is slashing the budgets of councils that deliver for local people.

“The experts at IPPR Scotland have said that the cuts are most significant in 2017-18 and 2018-19, these are the hidden cuts or hidden tax rises which the SNP aren’t telling us about before May.

“So here we are, the most significant budget in Scotland’s history delivered by a party who promised to stand up for Scotland against Tory austerity.

“Does it deliver fairer taxes? No. Does it deliver a longer term plan for Scotland? No. Does it deliver an anti-austerity alternative? The answer to that is no.

“After nine years in power, a majority in this parliament and more powers than ever before, isn’t it the case that in substantial areas of this budget John Swinney is simply copying George Osborne?

“That is not anti-austerity and surely, surely, Scotland deserves better than that?”

Mr Swinney hit back, saying: “All that Jackie Baillie delivers, all the Labour Party deliver, is abuse and hectoring of other people and they don’t produce an alternative of what they would do differently.

“What I’ve put forward is a budget which protect the incomes of the lowest income households in Scotland. That’s the most effective way that we can use the powers available to us today to secure the best interests of the people that we are elected to serve in this Parliament.”

Meanwhile the Conservatives and the Liberal Democrats criticised Mr Swinney for failing to use the new powers over income tax.

Tory MSP Murdo Fraser said: “He chose not to increase the resource available to him by levying additional taxes.

“For all we hear about austerity and swingeing cuts, we need to remember the Scottish Government’s total budget for the coming year is in cash terms nearly £400 million higher than the current year, and in real terms there is a small decrease, but that decrease is substantially less than the Finance Secretary’s most recent underspend.

“In that context, any talk of swingeing cuts simply looks ridiculous.But if it is still the SNP’s position that the budget is still too low, then the solution is now in their own hands.

“For years, he (Mr Swinney) has portrayed himself as the prisoner of Westminster austerity, but now that he has been given the key of the door to his cell, he has chosen not to use it.” Mr Fraser said he was disappointed Mr Swinney had not brought forward greater changes to LBTT, but he added: “I welcome him following George Osborne’s lead in increasing the supplement for second homes, showing that, once again, where the Conservatives lead, the SNP follow.”

Lib Dem leader Willie Rennie said: “The Deputy First Minister has spent his entire political life campaigning for more tax powers, and what does he do when he gets them?

“Nothing, no change, the same rate.

“Exactly the same as in England, so how can the Deputy First Minister tell this chamber that he is rejecting austerity, when he is not raising a single penny more, even though he has the tax powers to do something about it?”

Mr Rennie also hit out at mental health funding levels, the SNP’s already “woeful” record on childcare, and its “patch up” of the police budget, which he said was “covering mistakes of the past”.