THE Scottish Government has announced a new income tax band for higher earners in its annual Budget.
Deputy First Minister and Finance Minister Shona Robison made the announcement during the Scottish Budget statement in Holyrood on Tuesday.
The new income tax band will be set at 45% and will be for individuals who earn between £75,000 to £125,140.
READ MORE: Council tax freeze 'will result in cuts to vital services' amid £160m cash shortfall
In other areas of tax, the three lowest rates will see no increase to their rates while the starter and basic rate bands will increase by the level of inflation.
The changes will bring in another £1.5 billion to Scotland’s finances next year when compared to the tax policy of the UK Government, Robison said.
Robison insisted that asking higher earners to pay more is the "right choice", and that the changes would not impact those who are the "backbone of our public service", such as teachers, police officers and nurses.
The total take from income tax is forecast to rise to £18.8bn in 2024-25, according to economic experts at the Scottish Fiscal Commission (SFC).
The changes will also see the Scottish Government increase the top rate of income tax, which is levied on the very highest earners, by 1p to 48p.
While the threshold at which people start to pay the lower bands of income tax will rise in line with inflation, Robison confirmed the threshold for the higher rate and the top rate would be maintained at current levels, of £43,662 and £125,140.
This will mean more Scots become eligible for these higher payments as wages rise.
Saying the additional money raised could be used for public services, Robison told MSPs: “Asking those with more to pay more is the right choice.
“It is a choice rooted in our values and it is in stark contrast to the tax and service cuts of the Tory Party.
“In making these choices, we are supporting public services.”
While MSPs themselves will not be impacted by the new advance income tax rate, Robison said MPs – such as Scottish Conservatives leader Douglas Ross, who currently sits at both Westminster and Holyrood – would have to pay more.
Robison then took a jibe at the Scottish Conservatives leader, adding: "In case Mr Ross is wondering, because they get paid more than £86,000, MPs will have to pay a little more tax”.
Scottish Secretary Alister Jack (below) said the decision to increase taxes on the wealthiest is “bad for our economy”.
Reacting to the announcement, Jack said: “Today’s Scottish Budget widens even further the tax differential between Scotland and the rest of the country.
READ MORE: The key points from the Scottish Budget statement
“Making Scotland the highest-taxed part of the United Kingdom is bad for our economy. It deters business investment and punishes hard-working people.
“The Scottish Government has a record block grant yet wastes hundreds of millions of pounds.
“It needs to take responsibility for its spending choices and the resultant self-inflicted budget black hole, rather than blaming the UK Government and penalising Scottish taxpayers.
“The UK Government is cutting tax for individuals and for businesses. The Scottish Government should do the same.”
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