Small budget analysis: The Scottish Government has the opportunity to move away from Westminster RS News

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THE SCOTTISH GOVERNMENT has big decisions to make that could spell a different path for Westminster.

Devolved tax powers have been a difficult issue for the SNP, as some are yet to be exercised.

But with Kwasi Kwarteng’s radical overhaul of personal tax and stamp duty – attention is now on ministers at Holyrood and their reaction.

The UK Government’s renewed love for the low economy couldn’t be further from Nicola Sturgeon’s mantra.

Tax cuts for the super rich will not appear in any reformed plan for Scottish independence, and neither will bank bonuses.

Scotland currently has a very rich tax bracket set at 46 per cent, a threshold that is slightly higher than the 45% those earning more than £150,000 currently face at the bottom of the threshold.

As it stands, it is estimated that only 22,000 taxpayers in Scotland fall into this very wealthy tax bracket.

The Scottish Government cannot make a final decision on income tax until it delivers the budget to Holyrood.

But the First Minister has dropped strong hints that he has no interest in “following blindly” as he bluntly put it.

Instead, Mrs Sturgeon insisted that “the super rich will be laughing all the way to the bank”, adding that she suspected “many of them would be appalled by the Tories’ misbehaviour”.

If the Scottish Government, as is likely, does not proceed to eliminate the tax rate for the very rich, those who earn £ 200,000 a year will pay £ 6,000 more than if they live in England – the hope that the ministers of the SNP will be very comfortable with.

But the problem comes at the other end of the scale and the impact on other low-income earners.

The Chancellor also announced that the basic rate of tax in England will be cut from 20p in the pound to 19p. Currently the average basic rate in Scotland is set at 21p.

Pressure will be on SNP ministers to match the move in the next financial year, given the number of people who could be affected.

The Scottish Government, which has repeatedly complained about receiving less money from Westminster, may decide to spend some of the £600m it will receive to pay for policies from the Treasury in key public services.

This is a political gamble – it can show a devolved government using the funding as it sees fit, especially during a cost of living crisis.

If SNP ministers decide to ignore Westminster tax policies, most taxpayers in Scotland will pay more in income tax than in the rest of the UK – a less politically relevant message amid rising living costs.

If the SNP ministers decide to go ahead with the higher rate of tax, but propose a fundamental change, the Scottish Government may look to those who need help – but will offer around £400m to pay for it.

Similarly, the Scottish Government will be given funding from the Treasury to reduce stamp duty in England and Northern Ireland for Land and Building Transfer Tax.

But already, the SNP has urged caution, with the party’s Alison Thewliss yesterday warning that the move “will not help – it will further heat up that housing market”.

Ms Thewliss also told the Chancellor that a smaller budget means Scotland needs another option, independence.

But Scottish ministers have the power to break out of Westminster and tread a different path to mainstream economic ideas. It’s all in their hands.


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