UK tax hike would have 'massive' impact on Scotland – Robison

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BBC Scotland’s Finance Secretary Shona Robison warned that any changes in UK tax policies could have a significant impact on Scotland’s public services. Robison mentioned that a potential income tax increase in the rest of the UK might result in a £1bn reduction in the Holyrood budget. She also did not rule out the possibility of increasing income tax in Scotland to offset any shortfalls that might arise.

Chancellor Rachel Reeves hinted at potential tax hikes ahead of the upcoming Autumn Budget, emphasizing the need to safeguard public finances. The Scottish government, with its devolved powers, has established a separate income tax system from the rest of the UK. While a change in UK income tax directly affecting taxpayers in England, Wales, and Northern Ireland might not impact Scottish taxpayers, it could lead to reductions in the block grant paid by the Treasury to Scotland.

Robison expressed concerns regarding the fiscal framework, highlighting the possible drawbacks associated with a cut in the block grant due to potential income tax hikes in other parts of the UK. She stressed the importance of Scotland not being overlooked in the Chancellor’s Budget planning. The Fraser of Allander Institute estimated that a 2% increase in UK income tax could lead to a substantial cut in Scotland’s block grant over the next few financial years.

The Scottish Labour leader Anas Sarwar refrained from confirming whether Chancellor Rachel Reeves would raise income tax, reiterating the Scottish government’s role in determining tax policies. While there were calls for tax increases from various political figures, concerns were raised about the impact on hard-working Scots. With the Scottish Budget delayed until January 15, there will be less time for scrutiny before the financial year’s end in April, coinciding with the upcoming Holyrood election in May

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