DEREK Mackay has rejected Tory pleas to cut taxes for high earners.

Yesterday, in his third Budget as the SNP government’s Finance Secretary, he announced a freeze in the higher rate tax threshold and an increase in the basic and intermediate rate thresholds by inflation.

This, he said, would mean the bottom 56% of taxpayers in Scotland – all those earning under £26,999 – would pay less income tax in Scotland than those on the same wage living in the rest of the UK.

The Finance Secretary said keeping the 41p higher rate threshold starting at £43,430 would bring in an extra £68m for the Scottish Government’s coffers.

But with Chancellor Philip Hammond’s decision to increase the higher rate south of the Border, the change means Scots earning £50,000 will pay around £1500 more in income tax than their counterparts in the rest of the UK.

READ MORE: Derek Mackay faces challenge to get Budget past Holyrood

The Scottish Tories said these were middle-class tax hikes the SNP didn’t need to impose. But Mackay said 99% of Scots workers would pay less next year.

Scotland was, he added, the “fairest taxed part of the UK”.

Analysis by the Fraser of Allander Institute estimated that Mackay’s freeze would raise approximately £550m more for the Scottish Government’s coffers than it would have done had they matched Hammond’s rates.

They said a nursery assistant on £16,000 will pay £810 on their salary this year, but will pay £680 in income tax next year, compared to £700 in the rest of the UK.

A Scottish train driver on £52,000 will hand over £10,004 this year. Next year they’ll pay £9684 in taxes, while their colleagues in the rest of the UK will pay £8300.

The National:

The SNP minister told MSPs that his spending plans were being delivered in the context of continuing austerity and “a UK Government careering towards Brexit at any cost”.

He warned Holyrood that if the UK crashed out of Europe without managing to secure a deal he would need to revisit some of his spending priorities.

Health was the big winner. Mackay promised to increase the resource budget for the health portfolio by almost £730m, an increase of around £500m in real terms.

There was also a commitment to increase direct investment in mental health services by £27m taking overall mental health funding to £1.1 billion in the next financial year.

Other key announcements included a £500m investment in expanding early learning and childcare and more than £180m to raise attainments in schools, most of which, around £120m, would go to headteachers as part of the SNP government pupil equity fund. There was also a 3% pay hike for public sector workers earning up to £36,500. While for business there was the introduction of a below-inflation cap of 2.1% on business rate increases.

Mackay also announced extra revenue and capital funding for local government and £5bn of infrastructure investment over the coming year, including £1.7bn for transport.

He revealed new growth forecasts from the Scottish Fiscal Commission, saying the independent body had revised up previous predictions and now expected GDP in Scotland to grow 1.4% in 2018 “which is faster that the growth in the UK as a whole”.

There was a clash over the money coming to Holyrood from Whitehall with the SNP MSP saying the Treasury had cut Scotland’s block grant, despite Hammond’s recent NHS spending splurge, which resulted in new consequentials coming to Scotland under the Barnett Formula.

“The facts are these,” said Mackay, “Scotland’s resource block grant will be almost £2bn lower in real terms in 2019/20 than it was 2010/11, a fall of 7%.

The Finance Secretary added: “If this year’s Budget consequentials for investment in the NHS are excluded, which is reasonable given our commitments to pass all of these consequentials on to health, our 2019/20 resource block grant is £340m less than it was in 2018/19.”

Tory Murdo Fraser dismissed Mackay’s claims, telling MSPs: “It’s a source of regret for us all that today’s big statement has been overshadowed by events at Westminster, I refer of course to the £950m increase in the Scottish block grant, announced by the Chancellor in his Budget in October.”

The National:

He said the increase meant the total Budget was up in real terms, nearly £1bn since 2010.

Labour’s James Kelly told Mackay it was a “woeful” SNP Budget: “Scotland has been let down by Nicola Sturgeon’s timid government and Derek Mackay’s timid Budget,” he said.