Amid growing speculation the Scottish government will introduce an additional 44p rate on incomes between £75,000 and £125,000, the Fraser of Allander report has lowered its estimate of how much that would raise from £56m to about £41m – well below the £92m suggested by the Scottish Trades Union Congress.
According to the Times Scotland, the proposal caused disputes within the cabinet, with some ministers warning it could alienate middle-income and aspirational voters, but ultimately it was accepted, with the Scottish Fiscal Commission told of the decision last week.
Those earning more than £28,000 already pay more tax in Scotland.
In a sign of the pressures facing the cabinet, a coalition of business networks warned the move would hamper recruitment from elsewhere in the UK, while the former finance secretary and Scottish National party leadership candidate Kate Forbes told ITV Border on Thursday it was “very difficult to protect against behavioural change”.
Change the rules, you change peoples’ behaviour. The Lucas Critique that is. With tax changes, you must therefore have dynamic scoring of revenue changes. Which means considering the income effect and the substitution effect.
A helpful hint here. Do not get Richard J Murphy to do that dynamic scoring. The last time he tried this, for the TUC, he got the sign wrong. Actually insisted that among married women in high income families the income effect would predominate, leading to a rise in their labour supply. It is, of course, the oppsite.
I applaud them trying this tax experiment as it should further help define the shape of the Laffer curve. It also should make the Murphy’s of the world accept that the Laffer curve is real and works, but it won’t.
The Jocks already have slightly higher income tax rates than us:-
For 2023/24 they will be
£12,571-14,742 19%
(WTF is the point of that? An annual tax saving of £21.61).
£14,723-25,688 20%
£25,689-43,662 21%
£43,663-125,140 42%
£125,141 upwards 47%
So an increase from 42 to 44% between £75-125k would only bring in an extra £1k per taxpayer affected. Hardly earth-shattering.
(Needless to say their petulant determination to be different does not preclude them from mimicking us by also clawing back the personal allowance between £100-125k).
It would be amusing if the tories cut their grant of free English money by the amount they claimed this was going to raise.
I must confess to being a convert to the Green/SNP outlook of the porridge wogs’ preference of government. So, in much the same way as Extinction Rebellion. seek to make our lives hell to prepare us for Global Boiling, I propose we English stop giving them money to prepare them for Independence.
This will add further to their earnest discussions with Useless von der Leyen’s mob and hasten their conversion to the Euro…
Cool – so from next year in Scotland employed earnings between 100k and 125k incur a marginal rate of 70.1%
44% PAYE
2% Employee NICs
20% loss of personal allowance
13.8% Employers NICs which comes off first
I reckon the number of employees in that range will be a rounding error.
It would certainly be worth letting Sco set its own tax rates for fuels and CGT imv, devolving drugs too so they can legalise and tax.
The move may appease Scotland’s third sector,
Oh, good news. It may appease professional parasites who do not pay taxes.
A lot of people will be stashing income over £75k into their pensions, especially now that Hunt raised the annual allowance from £40k to £60k and is abolishing the Lifetime Allowance.
“ especially now that Hunt raised the annual allowance from £40k to £60k and is abolishing the Lifetime Allowance.”
Just wait til Sir Starmer gets in – he’ll be after the pension ‘wealth’ of the ‘rich’ parasites who have the temerity to save for their future.
So, going from five bands to six bands. They do like their ever-more complicatedness up there, don’t they?
Steve
I prefer the term vermin – successful parasites don’t usually kill off their hosts as most of these ‘professionals’ are managing to do. (Is Idleness a profession?)
Minor quibble but as so many of them tell us ‘Words matter’. I’d certainly be delighted to use the equivalent of Rentokil or Ecolab to remove them for sure.
(WTF is the point of that? An annual tax saving of £21.61).
Difference. It could be a penny, but as long as it isn’t the same as the rest of the country, it makes Scotland different. Other than their own salaries and expenses, that’s literally all the SNP cares about.
I have it on good authority that (at least) one of the major insurance companies halted all investment in Scotland for ten years just before the 2014 referendum, regardless of the result. So that’ll be up for review next year. I’m sure this will be being watched with great interest.
My Monkey Quotient on this is pretty low. So long as the Jocks stay in Jockland and the Gazans stay in Gaza.
Jimmers,
Never forget that Sir Starmer is not subject to the same rules as the rest of us plebs.
https://www.legislation.gov.uk/uksi/2013/2588/contents/made
The Pensions Increase (Pension Scheme for Keir Starmer QC) Regulations 2013
UK Statutory Instruments 2013 No. 2588
John: “These Regulations apply the provisions of the Pensions (Increase) Act 1971 to any pension payable under the pension scheme made under section 1 of the Superannuation Act 1972 for the Director of Public Prosecutions, Keir Starmer QC.”
So what does that actually mean?
We need punitive taxes on large foreheads, quiffs and nasal accents. Ideally also for bright blue suits and taking the knee.
That’ll settle the cvnt.
Sam,
I understand it to mean that the prevailing legislation concerning pension pot limits and punitive taxation for exceeding the same applied to the little people but not to Sir Starmer because he has his own personal Statutory Instrument that says so.
It’s worth it to include NIC paid by employees, since it’s a tax by a different name, and the effect of the withdrawal of the personal tax allowance above £100k to get the full fun of tax bands in Scotland.
For 2023/24
£0-£12,570: 0%
£12,571-14,742 31%
£14,723-25,688 32%
£25,689-43,662 33%
£43,663-£50,270 54%
£50,271-£100,000 44%
£100,001-£125,140 66%
£125,141 upwards 47%
If your family receives child benefit you can add in another band. Above £50,000 they start clawing it back. By the time you reach £60,000 you’re paying it all back. If you have 3 kids, that would be an extra £2,901 tax paid.
If you happen to have a repayable student loan, add 9% above c27k (depending on which loan plan you’re on – there are 4)
If you had a student loan and 3 kids, of the £10k you earned between £50k and £60k in Scotland, you’d pay £8,254 in tax and NIC.
I knew that Sir Kneel has a speshul pension but I didn’t know it was the Law of the Land.
If the Fake Tories can’t use this in the Battle of the Most Hated (aka the general election) they are as useless as the appear to be.
An Act of Parliament ( a Rose by any Other Name introduced in a sneaky way that avoids debate = SI) for ONE MAN! I always thought that having a Knight of the Realm as the leader of the party of the working man was funny, but this…