Derek MacKay’s third budget of this parliamentary session was doomed to be overshadowed by events at Westminster.
With many people’s attention only partially focussed on events at Holyrood, much Scottish budget commentary will not get beyond an analysis of income tax differentials. Whilst MacKay had heavily hinted in recent weeks that he would not follow the UKG policy to substantially increase the higher rate, he surprised many by freezing the threshold in cash terms. Scottish taxpayers will start paying 41% higher rate at income above £43,430, whilst counterparts in rUK will continue to pay basic rate of 20% up to an income of £50,000.
The Scottish income tax policy is estimated to raise Scottish Government revenues by just over half a £billion compared to what it would raise if it followed rUK tax policy, although the difference in tax liability for individuals is now quite marked, particularly for those with incomes around £50,000.Continue reading