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Question ref. S4W-20250
Asked by: Jamie Hepburn, Cumbernauld and Kilsyth, Scottish National Party
Date lodged: 19 March 2014


To ask the Scottish Government what analysis it has carried out of the economic impact on Scotland of increasing the additional rate of income tax from 45p to 50p.

Current status: Answered by John Swinney on 27 March 2014


The Scottish Government's ability to adjust the income tax system is significantly constrained under the current devolution settlement. Even under the new income tax powers being introduced under the Scotland Act 2012, the Scottish Government would not be able to restore the 50% rate without also adding 5p to the basic and higher rates of tax. Such a change would significantly increase the tax burden faced by all Scottish households currently paying income tax, with the average person earning £21,600 a year having to pay over £500 more in income tax. Only independence will provide future Scottish Governments with the flexibility to adjust the tax system and broader policy levers to grow the Scottish economy and reduce inequality.

HMRC estimate that a 1p increase in the additional rate would generate £135 million in 2016-17 across the UK as a whole. On this basis, a 5p increase in the additional rate in Scotland is estimated to generate around £30 million.