Report suggests billions in tax hikes to pay for SNP minimum income guarantee

A report paid for by the Scottish Government has floated the idea of billions in tax rises to fund the SNP’s plans for a minimum income guarantee (MIG).

The proposals amount to around £6.39bn in changes to taxes in the long-term, including income tax and council tax rises, although some of the changes would require the devolution of more financial powers.

The report was conducted by WPI Economics on behalf of the Minimum Income Guarantee Group set up by the Government.

The group is looking to deliver on the SNP’s manifesto commitment to establish an MIG for Scots.

The Scottish Government has said the aim of an MIG “is to provide a universal guarantee of financial security achieved through an income floor beneath which no-one would be allowed to fall”.

The report estimates the cost of the policy to be around £8.1bn a year.

Among its proposals for raising the cash needed to fund the policy, it suggests lowering the personal allowance for Scottish income tax to £7,570 at a cost to the public of around £2.68bn.

It also suggests reforming council tax by making the most expensive households pay up to 22.5% more above inflation, taxing income at 42p in the pound for salaries over £40,000 and applying Scottish income tax to dividends and savings.

The report also admits “there are short-term political difficulties around utilising existing revenue-raising powers, with the 2024 Scottish Government tax strategy committing to no major changes to Scottish income tax policy”.

It lists non-tax-raising options, such as Westminster increasing Holyrood’s block grant or economic growth leading to higher tax receipts.

It said that the Scottish Government would probably need greater fiscal powers than it currently has to deliver the policy in the long term.

The Scottish Conservatives urged ministers to immediately rule out these tax rises and “abandon any attempts to impose even more costs on Scotland’s ballooning benefits bill”.

The party’s social security spokesperson at Holyrood, Alexander Stewart, said: “These staggering tax rises proposed by an SNP talking shop would pile further misery on hard-working Scots.

“The public are already suffering with £1.7bn worth of tax rises from SNP ministers – yet all the while public services have deteriorated.

“Every single taxpayer in Scotland could be hit with an eye-watering £950 bill if these tax rises were to be implemented.

“The fact these tax rises would not even be able to cover the enormous £8bn bill required to implement a minimum income guarantee should worry Scots that further tax hikes will be necessary too.

“After squandering taxpayers’ money on a report even nationalists knew was doomed to fail, John Swinney should immediately rule out this multibillion-pound tax bombshell and drop the SNP’s minimum income guarantee plans for good.”

A spokesman for the Scottish Government said: “These are proposals of an independent group, not the Scottish Government.

“We are taking the time to consider their recommendations before responding, taking into account affordability in the current financial context.

“We have no plans to change tax policy to finance this.”