Scotland’s highest earners to benefit from Corbyn’s tax promises

Scotland's highest earners to benefit from Corbyn's tax promises

Jeremy Corbyn

The highest earners in Scotland will pay less tax than their counterparts in the rest of the UK under Jeremy Corbyn’s plan for government, a new analysis by the Fraser of Allander Institute has found.

The economic research institute which is based at the University of Strathclyde has carried out an analysis of all the political parties’ plans and their impact on Scotland after the election.

The report found that Labour’s plan to target top salaries could make Scotland the lowest-taxed area in Britain for those who earn six-figure salaries.l

The institute also revealed that under all of the UK-wide parties” spending plans, Holyrood’s budget would increase to surpass “pre-austerity levels.”

Labour’s policies would bring the most significant increase in the block grant from London to Edinburgh with a “radical increase in public spending” producing a rise of 5.5%.

However, the researchers from the Institute expressed scepticism about how the policies would be funded. They said such policies would necessitate a “fundamental rethink of the role of the state in our economy.”

The report said: “Alongside a rise in borrowing Labour’s intention is to pay for this through increases in corporation tax, capital gains and dividend taxation, and a number of other taxes on businesses. All of these would apply in Scotland. Whether or not the revenues raised will be anything like what is hoped for is open to question.”

Income tax is devolved and anyone in Scotland who earns more than £27,000 each year pays more under the Scottish government’s policies than they would if they lived in England

The report also said: We don’t yet know how Scottish ministers may choose to respond should income tax policy shift significantly in the UK, Will they keep the current system in place in Scotland? Or will they be motivated to respond, perhaps to retain a narrative that Scotland has the most ‘progressive’ tax system in the UK?

“Under Labour’s proposals, assuming that the Scottish system remained the same, Scottish taxpayers earning between £25,000 and £125,000 would still pay more than those in the UK, while those earning above £125,000 would actually pay less.”

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