Scotland's new income tax system should help attract people to the country, the Finance Secretary has claimed.
Derek Mackay said the income tax plans he had set out in his draft Budget for 2018-19 would make Scotland the "fairest taxed part of the UK" and would offer the "best deal" for the majority of earners.
While he told MSPs on Holyrood's Finance Committee that he did "not want to overplay" the reduction that some people will see in their income tax bills, he said the changes "primarily" benefited lower earners.
Scottish Conservatives have repeatedly criticised the Scottish Government's tax plans, claiming rises in some of the income tax rates make the country the highest taxed part of the UK.
READ MORE: National Audit Office asked to probe 'reasonableness' of £39bn EU divorce bill
But Mr Mackay hit back at this suggestion, saying the new five band system he is introducing "will mean 55% of taxpayers, those earning up to £26,000 a year, will pay less tax than they would elsewhere in the UK".
This would make Scotland "the lowest taxed part of the UK for the majority, and I would argue the fairest taxed part of the UK, with the best deal in terms of expenditure and entitlements also," he said.
The Finance Secretary insisted: "Despite what some people would gleefully argue, which undermines Scotland, Scotland is now - in terms of personal taxation for a majority of taxpayers - the lowest taxed part of the UK.
"I think it offers the best deal, so that should attract, I think, people to Scotland because of the deal and the quid pro quo it offers for what people pay."
Scottish Government tax proposals for 2018-19 will see the basic rate frozen at 20p, as well as the introduction of a new intermediate rate of 21p, which will kick in after £24,000.
The higher rate and additional rates are also being upped by 1p to 41p and 46p respectively, but the changes - which are still going through Holyrood - offset that with the introduction of a ''Scottish starter rate'' of tax of 19p, which will apply to the first £2,000 of taxable income between £11,850 and £13,850.
"It is structural change and it is structural change that does benefit a majority of people and as it happens it is those that are lower earners primarily," Mr Mackay said.
While Scots earning between £33,000 and £43,000 will pay more income tax in 2018-19, Mr Mackay accepted those earning between £43,000 and £58,000 will actually pay less than the previous year.
Tory Adam Tomkins demanded to know: "How is that fair and balanced?"
Mr Mackay said it was "an anomalous situation", saying that "resetting the tax structure the way we have done creates that anomaly".
He added: "It is coming from the structural resetting of the new system, which introduces the starter rate, has the intermediate rate, has the thresholds in terms of the higher rate, raised in line with inflation.
"It creates that unintended consequence for a particular bracket."
He also accepted it was not certain at the moment if Scots who pay the new intermediate tax rate will continue to benefit from the married couple's tax relief which basic rate taxpayers get.
Mr Tomkins pressed the Finance Secretary to "give us an assurance that people on the intermediate rate will not lose that allowance".
But Mr Mackay said as only parts of the income tax system are devolved, it was Westminster who would have to act to ensure married couples do not lose out.
He said: "These issues are not within our gift to resolve, they are in Westminster's gift to resolve and they should respect the fact that the Scottish Parliament is using its devolved functions in the spirit of Scottish democracy."
Letters: London-centric Government treats Scots as second-class citizens
He added: "I can not give the assurance that Westminster and ensure that the devolved powers in Scotland are exercised fairly.
"But I have found in many other matters in relation to the Budget that they have been willing to take a constructive approach on a number of matters and I hope they will take a constructive approach on this as well."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel