THE First Minister failed to rule out raising taxes at the next Scottish Budget as fears grow his hand will be forced by decisions taken in Westminster.
John Swinney repeatedly refused to say whether taxes will go up north of the Border after Chancellor Rachel Reeves used an unusual pre-Budget speech to lay the ground for tax increases, in breach of Labour’s manifesto commitments.
Raising income tax at Westminster cuts the Block Grant which is sent to Holyrood, meaning that Scottish ministers need to cut spending or increase tax accordingly.
During an exchange at First Minister’s Questions on Thursday, Scottish Tory leader Russell Findlay asked Swinney a number of times whether he would hike taxes at the next Budget.
The First Minister refused to be drawn on the question but did hit out at Labour increasing employers’ National Insurance contributions, which he said was “profoundly damaging” to the economy.
Findlay said he agreed on the point about National Insurance but added: “He doesn’t seem to know if he supports Labour’s tax rises or not, so I’d like to remind him what he said after last year’s UK Budget.
“I quote: ‘The UK Government should have increased income tax.’”
Findlay said that Scots had “two left-wing parties” in Labour and the SNP who “only want to tax, tax, tax”. He added: “Labour are doing the same as the SNP have done for the past decade.”
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In response to Findlay’s demand for a “cast-iron guarantee” that the SNP would not increase any taxes, Swinney said that “these questions will be set out at the Budget” while arguing that higher taxes in Scotland funded policies which meant child poverty was lower than in England and meant Scots enjoyed more free services than people south of the Border.
He added: “What we have heard from Russell Findlay and the Conservatives over a consistent period of time is that they are not prepared to engage in the tough judgments about delivering for public services.
“They keep on asking for more money but they won’t take the decisions to enable money to take place. That is pure and utter hypocrisy.”
Scots earning more than around £30,300 per year pay more than their counterparts down south however those earning less than that pay less tax than workers in England and Wales.
This means that most, around 51% of Scots, pay less income tax than workers in England and Wales.
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Reeves gave a speech which he critics labelled an "emergency" address earlier this week in a move seen as an attempt to lay the groundwork for a massive U-turn on Labour's election promise not to raise income tax.
Elsewhere in the session, Swinney told Scottish Labour's finance spokesperson Michael Marra (below) to read "a book about elementary accounting" after the First Minister was challenged on the Scottish Government's £1 billion underspend.
Swinney said that £247 million could not be spent by the Scottish Government because it was money controlled by the UK Government.
He said: "He's just demonstrated to Parliament that he doesn't have a clue about the public finances."
The First Minister added: "Mr Marra doesn't understand that the resources that are contained in the underspend are all used in the financial year, this current financial year [2025-26], all allocated, supporting the reductions in waiting lists that I'm presiding over."
Audit Scotland's report on the underspend said that it had occurred because of additional funding from the UK Government and one-off savings.
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