Nicola Sturgeon says the time is right to consider raising tax to protect public services

NICOLA STURGEON has set out alternative approaches to income tax which could see “modest additional contributions” introduced for higher earners.

The First Minister said the time was right to consider raising the tax to protect public services, as she launched the Scottish Government’s paper on the role of income tax in Scotland’s budget.

The document sets out each political party’s tax plans, and includes a further four illustrative options – which the First Minister stressed are “not at this stage firm policy proposals”.

All four include tax rises to a greater or lesser extent compared with current arrangements, indicating that the Government intends to increase the levy in its draft Budget for 2018/19, due to be published next month.

“Nothing is a foregone conclusion until the Budget is not just presented but passed, but I think you can get the sense from this paper today, what I have said previously and what I am saying today, that I think the time is right to consider modest additional contributions to protect the things we hold dear,” Ms Sturgeon said.

The paper was welcomed by the Scottish Greens, who back a tax increase alongside Labour and the Liberal Democrats, with co-convener Patrick Harvie saying that the status quo was “now the least likely option”.

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However, businesses warned they were “unconvinced” that raising the tax was the right move.

Ms Sturgeon was clear that the Government would “not propose alterations to income tax rates lightly”, saying any changes would have to pass four key tests, the first of which is to consider if they will help maintain the level of public services that people expect.

Also, low earners must be protected, and changes to the tax regime must make the system fairer and more progressive, and must not damage the economy, she said.

The government’s four alternative approaches include having anything up to six tax bands, while three out of the four featuring a 50p additional rate and incremental changes to the basic and higher rates.

The approaches could raise between £80 million and £290 million in additional revenue, depending on which is selected.

Ms Sturgeon said: “All of the four alternative approaches at least protect those earning less than the median income which is £24,000, and when the increase to the personal allowance is taken into account none of these approaches would see anyone earning up to £31,000 pay a penny more than they do now.

“In all four approaches more than 70% of all adults would continue to pay no tax at all or no more tax than they do today.”

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Ms Sturgeon said the paper would inform a discussion between all the parties ahead of budget negotiations, with compromises needed by all sides.

“We will go into these budget discussions with an open mind, recognising we are a minority administration,” she said.

“We have signalled today the willingness to compromise, to move away from fixed positions, and I think its incumbent on all parties to do likewise.”

Mr Havie, whose party has argued for a radical redesign of income tax, said: “Greens have been pushing hard to make use of Scotland’s new income tax powers and it’s hugely significant that the Scottish Government is now looking at options which are more creative than simply tinkering with the basic rate as some parties have suggested.”

Andy Willox of the Federation of Small Businesses said: “The First Minister said today that no decision on income tax has been made. But it seems obvious that her administration is softening the ground for an increase.

“FSB will be making the case for a Scottish tax system which works for smaller firms and the self-employed.