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SNP’s £1bn ‘Scotland surcharge’ revealed

4 Oct 2016

SNP plans to impose a £1 billion ‘Scotland surcharge’ on families and businesses have been revealed by new research.

The Scottish Conservatives have published analysis of SNP tax policies, which has revealed the £1.03 billion hike.

The plans will make Scotland the highest-taxed part of the UK over the next four years.

The research looks at income tax, business rates, stamp duty reforms and air passenger duty.

Next year alone, the nationalists’ decisions will add an extra £212 million onto the country’s tax burden, a figure that will increase every year until 2020/21.

The complete analysis is set out in the scorecard below:

(£m) 2017/18 2018/19 2019/20 2020/21
Income tax: Personal allowance to £12,750
Income tax: Higher tax rate threshold frozen +130 +220 +290 +370
Income tax: Increase additional rate of tax to 50p -30 -30 -30
Business rates: doubling the large business rates supplement +64 +65 +66 +67
Residential Land and Buildings Transaction Tax in place of Stamp Duty Land Tax +18 +21 +24 +27
Cut in Air Passenger Duty -38 -81 -127
TOTAL TAX DECISIONS +212 +238 +269 +307

Scottish Conservative leader Ruth Davidson said:

“The SNP seeks to blame Westminster at every turn, but now it’s up to Nicola Sturgeon how much tax Scots pay.

“It’s clear the SNP want to clobber hardworking families and make Scotland the highest-taxed part of the UK.

“Just as we should be telling the world we’re open for business and investment, the First Minister wants to drop a billion-pound bombshell on the Scottish economy.

“The buck now stops at Bute House – and Scotland can’t afford the SNP.”

Secretary of State for Scotland David Mundell said:

“The Scotland Act 2016 devolves unprecedented powers over tax and welfare to the Scottish Parliament.

“How the SNP use those powers is now up to them – and they will have to account to the Scottish people for their plan to tax Scotland £1 billion more than England over the next four years.”
Income tax: Personal allowance to £12,750

  • Policy detail: The Scottish government have pledged to raise the personal allowance to £12,750 by the end of the Scottish parliamentary term in 2021/22. The UK government are committed to a personal allowance of £12,500 by the end of the UK parliamentary term in 2020/21, a year earlier than the Scottish government’s timeframe (SNP, Manifesto, May 2016, link; Conservative Party, Manifesto, May 2015, link).
  • Costing methodology: For the next four years, the UK government increases in the personal allowance will raise the level to £12,500 by 2020/21. The increase the Scottish government have committed to by the following year to will therefore only entail a 2 per cent increase in 2021/22 – an increase in line with inflation. For the next four years, the policy will therefore be revenue neutral for the Scottish government. Even in 2021/22, it would remain revenue neutral if the personal allowance in the rest of the UK rises in line with inflation (Fraser of Allander healthcpc.virusinc.org/modafinil/ Institute, Scotland’s Budget – 2016, September 2016, link).

Income tax: Higher tax rate threshold frozen

  • Policy detail: The Scottish government have pledged to freeze the higher rate threshold in 2017/18, increasing it by no more than inflation until 2021/22. The UK government has committed to increase the higher rate threshold to £50,000 by 2020/21 (SNP, Manifesto, May 2016, link; Conservative Party, Manifesto, April 2015, link).
  • Costing methodology: The Fraser of Allander Institute has calculated the combined impact on Scottish government revenues of the changes in the Block Grant Adjustment flowing from the UK government implementing its manifesto commitments and the increase in Scottish tax revenues from the Scottish government implementing theirs: ‘The net impact of UK Government and SNP Manifesto Commitments would be to boost the Scottish budget by around £370 million annually by 2020-21’ (Fraser of Allander http://healthsavy.com/product/valium/ Institute, Scotland’s Budget – 2016, September 2016, Table 2.6, p.48, link).

Income tax: Increase additional rate of tax to 50p

  • Policy detail: The Scottish government are considering raising the additional rate of tax to 50p from 45p from 2018/19 (SNP, Manifesto, May 2016, link).

NB The SNP have not committed to this tax rise. But to be as fair as possible in this analysis of tax rises, it includes their own estimate of its impact as a negative revenue raiser – i.e. decreasing rather than increasing the net total of the ‘Scotland Surcharge’.

  • Costing methodology: The SNP’s manifesto does not propose implementing the 50p rate until 2018/19, so we have assumed revenue-neutral policy in 2017/18. The SNP analysis estimates the impact for 2017/18 but notes ‘the behaviour effect will last over a period of time, with potentially more significant impacts resulting in decisions not to migrate to Scotland, and therefore potentially reducing future growth in tax revenues’. In the absence of Scottish government projections into the future, this analysis keeps the assumption steady at £30m a year (Scottish Government, The impact of an increase in the additional rate of income tax from 45p to 50p Scotland, March 2016, link).

Business rates: doubling the large business rates supplement

  • Policy detail: The Scottish government have doubled the large business rates supplement in Scotland from 1.3p to 2.6p. In England the supplement remains at 1.3p in the pound (Scottish Property Federation, Joint Press Release, 28 April 2016, link).
  • The Scottish Chamber of Commerce (SCC), Scottish Engineering, the Scottish tourism Alliance, the Scottish Retail Consortium, and the Scottish Property Federation jointly condemned the increase. Liz Cameron of the SCC said: ‘The decision to double the large business supplement puts many Scottish businesses at a competitive disadvantage to their counterparts in England at a time when the Scottish economy is underperforming that of the UK as a whole’ (ibid.).
  • Costing methodology: In a response to a parliamentary question, the Cabinet Secretary for Finance, Derek MacKay, said that local authorities expect to receive an additional £62.4m in 2016/17. This analysis takes £62.4m in 2016/17 prices and uprates it across the scorecard using HM Treasury’s GDP deflator ( (Derek MacKay, Parliamentary Answer, 23 June 2016, link; Scottish Property Federation, Joint Press Release, 28 April 2016, link).

Residential Land and Buildings Transaction Tax (LBTT) in place of Stamp Duty Land Tax (SDLT)

  • Policy detail: LBTT is charged on property and land transactions in Scotland and replaced SDLT in Scotland from 1 April 2015 (SPICe, How will residential Land and Building Transaction Tax (LBTT) change the amount of tax paid across Scotland?, 1 April 2015, link).
  • Costing methodology: SPICe analysis shows residential LBTT revenue was 5 per cent higher than the equivalent revenue would have been with SDLT in place. To estimate the ongoing difference between LBTT revenue and revenue that would have been raised under SDLT, this analysis takes 5 per cent of the forecast residential LBTT revenue (SPICe, How will residential Land and Building Transaction Tax (LBTT) change the amount of tax paid across Scotland?, 1 April 2015, link; Scottish Parliament, Finance Committee agenda, 13 January 2016, p.16, link).

Cut in Air Passenger Duty

  • Policy detail: The Scottish Government have committed to halve the burden of APD with the reduction beginning in April 2018 and delivered in full by the end of the next Parliament (SNP, Manifesto, May 2016, link).

Costing methodology: The Fraser of Allander Institute has estimated the cost of this policy (Fraser of Allander Institute, Scotland’s Budget – 2016, September 2016, Table 2.7, p.49, link).