THE Scottish Government’s tax decisions will continue to follow its “progressive” model that those with the broadest shoulders should pay more, a minister has said.
Social Justice Secretary Shona Robison said the government would also continue to look at what further taxes could be raised within the devolution settlement.
Deputy First Minister John Swinney will reveal the Scottish Budget on Thursday amid steep inflation and fiscal pressures. Trade unions have said tax reforms like reducing the threshold for the highest rate of income tax should be used to raise more money for public services.
Speaking to the BBC’s Sunday Show, Robison said the Scottish Government had put £3 billion in place to help people with the cost of living over the last year.
Robison said: “We have changed our tax system to be much more progressive than that throughout the rest of the United Kingdom. But we are doing that within a very limited fixed budget with limited tax powers and limited borrowing powers.”
She said she would not set out the government’s tax position ahead of Thursday but proposals like a land value tax would take time to introduce and would not generate revenue next year.
Saying the UK Government should have provided more help, Robison said: “We will set out our tax position on Thursday and it will follow the progressive taxation that we already have done to raise those extra resources – that those with the broader shoulders should pay more.
“Of course, we’ll continue to look at what more we can do around the taxation powers that we have.”
The Scottish Government does not have the powers to mitigate “every single pressure for every single family”, she said.
The Scottish Trades Union Congress (STUC) has put forward a series of tax proposals which it says will raise at least an additional £1.3bn a year for Scotland.
STUC general secretary Roz Foyer earlier told the Sunday Show that ministers should be using their powers to start to “redistribute wealth through our economy to where it’s needed most”.
Meanwhile, an economic research institute has said the Scottish Government can ease cost pressures by using devolved tax powers to generate revenue in the face of extreme financial pressures
Strathclyde University’s Fraser of Allander Institute’s pre-budget report has suggested the upcoming financial year has its challenges – but emphasises ministers can soften the damage.
Deputy First Minister John Swinney, who is acting as Finance Secretary while Kate Forbes is on maternity leave, will deliver the 2023/24 budget on Thursday.
But he said the extreme financial pressures facing the country will prevent the Scottish Government from going as far as it would like in helping people through the cost-of-living crisis.
The budget will instead prioritise tackling child poverty, delivering net zero and developing sustainable public services.
The institute’s report has also said the UK Government’s autumn statement, which will see Scotland receive an extra £1.5bn over 2023/24 and 2024/25, will more or less offset the inflationary impacts to the Scottish economy.
Professor Mairi Spowage, director of the Institute, said: “John Swinney is getting set to present his first budget in seven years, in what he acknowledged is an unprecedently tricky time for the Scottish public finances.
“The challenges he has been dealing with for 2022/23 ease a bit for 2023/24: there was some additional money announced at the autumn statement which generated around £1bn of consequentials, offsetting the inflationary pressures on the budget.
“But there is also flexibility that the Deputy First Minister has for the next financial year that were not available to him for this year – the Scottish Government does have tax powers that could be used, if he wishes, to raise more revenue.”
Emma Congreve, deputy director, said: “In amongst all the headline-grabbing decisions, it will be important to take a step back to see how this budget helps Scotland achieve its long-term ambitions.
“We are expecting that the government will set out, clearly and transparently, the choices it has made and what the impact, both good and bad, will be for policy outcomes and the impacts on different groups.”
Responding to the institute’s report, Swinney said the government had acted “decisively” to provide what support it could.
He said: “However, given the fiscal constraints of devolution, it is not possible to go as far as we would like and so the Budget will prioritise three areas – eradicating child poverty, transforming the economy to deliver net zero and creating sustainable public services.
“Difficult decisions are required and resources will be targeted where they are most needed and can secure maximum value from every pound spent.
“The economic challenges we face also require a fundamental change in the way we manage public spending.
“The Bank of England is predicting the longest recession for a century, so this Budget will set in motion reforms that will place our finances and public services on a more sustainable and resilient footing for the future.”
