THE Scottish Government should focus on replacing council tax rather than increasing income tax, a senior SNP backbencher has said.
Ahead of the Budget, former business minister Ivan McKee said it is time to scrap the “unfair” council tax in favour of a more progressive property charge.
SNP rebel Fergus Ewing also added his voice to those warning against a rise in Scottish income tax rates.
Finance Secretary Shona Robison will set out the Budget on Tuesday, against what is thought to be one of the most challenging fiscal backdrops since devolution.
The First Minister has committed to freezing council tax rates but a report earlier this week suggested a new income tax rate for high earners is being considered.
Writing in the Daily Record, McKee noted there is a growing gap between tax rates in Scotland and south of the border.
McKee said: “The problem comes when you expect voters to pay first class for services that don’t match.
“And the problem with continually increasing the income tax gap is eventually you get to the point where further increases bring in less and less money.
“Increasing the additional rate to 47p recently raised a paltry £3m.
“So any future action to raise significant additional revenue probably needs to focus on wealth and property, rather than income.”
He said council tax is “unfair” and suggested a system where everyone pays the same percentage of their house’s value.
Ewing, the MSP for Inverness and Nairn who has long criticised the SNP’s powersharing deal with the Greens, said the First Minister should cut back on spending rather than increase taxes.
He told The Scotsman that the suggested tax proposals are “flawed” and the government should instead cut “much of the madcap, impractical, unaffordable green fantasies masquerading as policy”.
Earlier, former SNP leadership contender Kate Forbes said she did not believe increasing income tax rates would necessarily bring in more money.
The Scottish Government has said “tough choices” will be needed in the upcoming Budget.
It says funding will be targeted at three key missions: “equality, community and opportunity”.
Ms Robison, who is also deputy first minister, set out a strategy earlier this year aimed at getting Scotland’s public finances on a sustainable footing and the Budget is expected to build on this.
While the First Minister has committed to freezing council tax, it has not been announced exactly how much local authorities will receive to compensate them.
The Fraser of Allander Institute believes there is a spending gap of £1.5 billion in the 2024/25 Budget which Ms Robison must address.
The economic think tank said a new Scottish income tax rate of 44p above a threshold of £75,000 would only raise around £40 million once behavioural responses are considered.
