Scottish Tories must block Johnson tax plans, urges Derek Mackay

12 June 2019, 06:55

Scottish Tories should try to block Boris Johnson's tax plans which could mean that Scots earning £80,000 a year pay almost £8,000 more than their counterparts in the rest of the UK, according to Economy Secretary Derek Mackay.

The Tory leadership frontrunner's announcement that he plans to cut taxes for higher earners in England, paid for by a National Insurance increase which would affect the whole of the UK, has been criticised by the SNP MSP.

With a pledge to increase the threshold for the 40p rate of income tax for the rest of the UK from £50,000 to £80,000, the former London mayor has been accused of making Scots subsidise a tax cut for higher earners south of the border.

Mr Mackay called for Ruth Davidson, leader of the Scottish Conservatives, to instruct her MPs to withhold their support for any budget which includes Mr Johnson's "outrageous" plan.

Mr Mackay said: "Boris Johnson's plans are a disaster for Ruth Davidson - it is a policy that proves once and for all that Scotland simply doesn't feature in Westminster Tory thinking.

"Ms Davidson has every reason to be worried about the prospect of Boris Johnson becoming prime minister - but she seems far more interested in what it means for her own political career than how it will affect the people of Scotland.

"The SNP has used the tax powers at our disposal to ensure that Scotland is the fairest tax part of the UK, and for a majority of people it is also the lowest tax part of the UK.

"Boris Johnson's plans mean that, not for the first time, our efforts to make Scotland fairer and more prosperous will be undermined by a reckless, right-wing Tory government at Westminster."

Any increase in the higher rate threshold implemented by Mr Johnson would not apply in Scotland, as the setting of income tax rates and bands is devolved to Holyrood.

However, the policy would be part-funded by increasing employee National Insurance contributions, over which Westminster has sole control.

Joanne Walker of the Chartered Institute of Taxation said the proposals would see National Insurance Contributions (NICs) rise by £3,000 for those earning £80,000 a year.

Unlike workers in the rest of the UK, Scots would not see a reduction in income tax, and Ms Walker said if rates north of the border remained the same, with people earning more than £43,430 paying income tax at 41p, there could be a significant gap in liabilities.

Speaking on BBC Radio Scotland's Good Morning Scotland programme on Tuesday, she said: "At a level of income of £80,000 we've worked out that Scottish taxpayers, providing the income tax system stayed exactly the same next year, they would pay £7,844 more than an equivalent UK taxpayer in combined income tax and NIC next year.

"Currently at that sort of level of income you're looking at a difference of about £1,500 in liabilities, so it is a significant jump."