The Scottish Government has unveiled its 2023 budget, introducing significant changes to income tax rates to address a £1.5 billion funding shortfall.
Finance Secretary Shona Robison announced a new 45% income tax band for individuals earning between £75,000 and £125,140, coupled with a top tax rate increase from 47% to 48% for those earning over £125,000.
The frozen thresholds for higher income bands (£43,663 and £125,140) mean an additional 62,000 individuals will now fall into the higher tax rate category. The Government estimates that these adjustments will generate an extra £80 million in revenue, contributing to a total increase of £1.5bn.
Scotland will now have six income tax bands, distinguishing it from the three in the rest of the UK, making it the highest-taxed region. Critics argue that these changes disproportionately affect middle and higher earners.
The budget also includes funding boosts for healthcare and local councils, offsetting a council tax freeze, but features cuts to enterprise funding, housing, higher education, and rural affairs.
Other key points include a partial increase in the Scottish Child Payment and a commitment of £1.5m to clear school meal debts. However, concerns arise as the higher education sector faces reductions, with a £107.4m cut for the Scottish Funding Council, along with cuts to colleges and universities.
During a visit north of the border before the announcements, Prime Minister Rishi Sunak said Scotland was the highest taxed part of the UK and that it would be "very disappointing" to see tax rates rise further.
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