Scottish Government tax and spending plans passed in Holyrood

The Scottish Government’s new tax and spending plans have been passed by the Scottish Parliament. 

The minority SNP Government, supported by the Greens, voted through the budget bill this afternoon. 

The budget includes increased spend on the NHS and more funding to reduce the attainment gap in schools. The support of the Greens was secured after the government agreed to a package of proposals, including an extra £170 million for local councils. 

But it is the new income tax regime which is generating the most interest. Agreed on Tuesday the new five-band system of income tax creates a 19p ‘starter rate’ for lower earners and a 21p ‘intermediate rate’ for those earning more than £24,000. An extra 1p will be added to the higher tax rates, making them 41p and 46p respectively. 

The BBC reports that someone earning £15,000 per year in Scotland will pay £1.67 less in tax each month than someone with the same salary in England. Someone earning £25,000 would pay 83p per month less in Scotland. 

The situation is different, however, for those earning above £33,000. For example, someone earning £35,000 per year will pay £7 per month more than an equivalent in England, while those earning £45,000 would pay £42 more per month. 

You can use the BBC online calculator to find out how these changes affect you.

The Compendium of the Social Doctrine of the Church declares that tax revenues and public spending are of crucial economic importance for every civil and political community (CSDC 355). It is critical for people to ‘pay social security contributions required by legitimate authority’. Indeed to fail in this regard would be unjust (CCC 2436). However, taxes must be fairly and reasonably applied, always observing the principles of solidarity, equality and making use of talents (CSDC 355). Just taxes should have a positive effect on the economy by encouraging growth in employment, sustaining business and non-profit activities, and helping to ‘increase the credibility of the state as the guarantor of systems of social insurance and protection that are designed above all to protect the weakest members of society’ (CSDC 355). It must also pay greater attention to families, setting aside an ‘adequate amount of resources for this purpose’ (CSDC 355).