Mini-budget analysis: Scottish Government has chance to walk own path away from Westminster

THE SCOTTISH Government has some big decisions to make that could define a different path from Westminster.

Devolved tax powers have been a thorny subject for the SNP, given some are still yet to be used.

But with Kwasi Kwarteng’s radical overhaul of personal tax and stamp duty – the focus is now firmly on ministers at Holyrood and how they react.

The UK Government’s renewed love for trickle-down economics could not be further out of step from Nicola Sturgeon’s mantra.

Cutting tax for the super-rich will not be appearing in any updated blueprint for Scottish independence, neither will be removing a cap on bankers’ bonuses.

Scotland currently has a super-rich tax bracket set at 46 per cent, a threshold already slightly higher than the 45% those earning more than £150,000 currently face south of the border.

As it stands, there are estimated to be only 22,000 taxpayers in Scotland that fall into this super-rich tax band.

The Scottish Government will likely not make a final decision on income tax rates until it presents its draft budget to Holyrood.

But the First Minister has dropped huge hints that she has no interest in “blindly following suit” as she bluntly put it.

Instead, Ms Sturgeon insisted that “the super wealthy will be laughing all the way to the actual bank”, adding that she suspects “many of them will also be appalled by the moral bankruptcy of the Tories”.

If the Scottish Government, as is likely, does not press ahead with abolishing the tax rate for the super-rich, those earning £200,000 a year would pay £6,000 more than if they lived in England – a prospect that SNP ministers will likely be pretty comfortable with.

But the problem comes at the other end of the scale and the impact on some of the lowest earners.

The Chancellor also announced that the basic rate of tax in England will be cut from 20p in the pound to 19p. Currently the basic rate threshold in Scotland is set at 21p.

Pressure will be on SNP ministers to mirror the move in the next financial year, given the number of people potentially impacted.

The Scottish Government, which has complained repeatedly about receiving less funding from Westminster, could decide to spend some of the more than £600m it will receive to offset the policies from the Treasury on core public services.

That is a political gamble – it could show a devolved government using funding as it sees fit, particularly during the cost-of-living crisis.

If SNP ministers decided not to mirror the Westminster tax policies, the vast majority of Scottish taxpayers would pay more in income tax than in the rest of the UK – which is a less than ideal political message amid soaring living costs.

If SNP ministers decide to press ahead with the super-rich rate of tax, but mirror the basic rate changes, the Scottish Government could claim it is looking out for those who need help – but would give up around £400m to pay for it.

Similarly, the Scottish Government will be given funding from the Treasury to offset cuts to stamp duty in England and Northern Ireland for Land And Buildings Transition Tax.

But already, the SNP has urged caution, with the party’s Alison Thewliss yesterday warning that the move is “not going to help – it’s going to overheat that housing market even more”.

Ms Thewliss also told the Chancellor that the mini budget meant that Scotland needed another path, independence.

But Scottish ministers have the powers at their disposal to diverge from Westminster and tread another path on key economic ideologies. It is all very much in their own hands.

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