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Hundreds of Scottish Government employees avoid higher SNP taxes

Hundreds of Scottish Government staff are benefiting from paying income tax south of the border – where rates are lower than under the SNP – the Scottish Conservatives have discovered.

The response to a Freedom of Information request by the party reveals the “embarrassing and telling” fact that 280 Scottish Government employees are not paying SNP rates – where everyone earning more than £28,000 is worse off, sometimes by thousands of pounds.

The SNP’s creation of a gulf in tax levels with the rest of the UK – which widened with Shona Robison’s budget last month – is likely to lead to ‘behavioural change’, according to independent experts such as the Scottish Fiscal Commission and the Fraser of Allander Institute.

That will not only lead to much lower revenue receipts than their forecasts, but could mean people are discouraged from living, working and paying their taxes in Scotland.

Liz Smith, Scottish Conservative Shadow Cabinet Secretary for Finance and Local Government, said: “The growing gulf in tax rates is a huge disincentive for people to live and work in Scotland, and one of the factors most likely to inhibit the economic growth we so desperately need.

“It is embarrassing and telling that so many Scottish Government staff should be paying the rate that applies south of the border to avoid the punitive tax imposed by the SNP.

“While it is entirely understandable that those with valid grounds for doing so – for example, if their family home is in England – should choose to avoid the extra tax imposed by the SNP it is also a humiliating rebuke to their employer.

“And, after the latest tax hikes in Shona Robison’s disastrous budget, it would be no surprise if more people in the south of Scotland moved house to Berwick or Carlisle – to avoid being clobbered further.

“These figures are a portent of the growing behavioural change we can expect in the wider workforce – which experts have warned about – because the SNP Government continue to make it more expensive to live here.

“Those huge extra costs for middle earners actually bring in a tiny proportion of the SNP’s funding shortfall, but they risk driving away the doctors, dentists, business people, engineers and others that are crucial to Scotland’s economic health.”

Notes

Hundreds of Scottish Government employees are paying English levels of income tax. A freedom of information request from the Scottish Conservatives revealed that 280 out of 16,345 Scottish Government employees are resident in England, meaning that they are exempt from Scottish taxes despite the SNP raising income tax to its highest level since devolution began. (FOI available on Request, January 3 2024)

Higher Tax rates might lose revenue according to the Scottish Government’s own estimates. As illustrated in the Scottish Government's evaluation of the 2018-19 policy changes, there is also a risk that any increase in the Top rate might lose revenue and this risk could increase the greater the divergence with the highest marginal rate in the rest of the UK. (Scottish Government, December 19 2023, link)