SNP finance chief Kate Forbes has revealed independence would mean doubling every single Scot’s income tax bill.
She made the admission after a Scottish Parliament debate where Labour laid out “ridiculous” plans to hike income tax by £12 billion.
Kate Forbes tweeted that Labour’s spending demands would require an extra £12 billion to be raised, which she pointed out equated to doubling every single Scot’s income tax bill.
But Scotland’s notional deficit stands at more than £12 billion, meaning the SNP would have to do exactly the same if their push for independence was successful.
The Scottish Conservatives said Kate Forbes “has revealed the cold hard fact that independence would make working people across Scotland poorer”.
Scottish Conservative Shadow Secretary for the Constitution Donald Cameron MSP said: “The Scottish public will be looking on in horror as the SNP and Labour fight over how much to hike income tax on ordinary working people.
“Labour’s plans are ridiculous but the SNP’s push for indyref2 is downright dangerous when the Scottish deficit is more than £12 billion.
“The very person who the nationalists have trusted to run Scotland’s economy has dealt a huge blow to their argument for independence.
“This is more than a humiliating gaffe. Kate Forbes has revealed the cold, hard fact that independence would make working people across Scotland poorer, by requiring a doubling of income tax.
“If the SNP got their way, every working person would be hammered by huge tax hikes. The economic case for separating Scotland is in tatters.”
Notes to editors
Kate Forbes’ tweet can be found here (link)
The Scottish deficit currently stands at £12 billion. As a share of GDP, Scotland had a higher deficit as a percentage of GDP than any other developed country in the year 2020-1, and a consistently higher deficit to GDP ratio than any developed country. (Financial Times, 18 August 2021, link).
Even before Covid, Scotland's deficit stood at 8% of GDP annually. This is virtually unheard of from any developed country outside of 2008 financial crisis. In 2019-20, the UK borrowed only 2.6% of GDP. It has only borrowed above 8% of GDP in three years since the Second World War. Scotland regularly runs a deficit of 8%. (IFS, How Would an Independent Scotland Borrow, 17 September 2021, link).
Scotland could not cover the deficit by borrowing as it does now. An Institute for Government study found that it would be more expensive for an independent Scotland to borrow on its own in money markets than as part of the UK. Because a newly independent Scotland would have no record on repayment, this would raise interest rates compared to the UKs good track record on repayment. Also, a new Scotland, with a new currency would have a more limited trading market for that currency because of reduced liquidity. Scotland's worse performing, and less stable, tax revenue would also raise rates through uncertainty. Scotland couldn't just borrow as it does now to cover its deficit. (IFS, How Would an Independent Scotland Borrow, 17 September 2021, link).