Ivan McKee told a hustings organised by Edinburgh Chamber of Commerce that although the party’s manifesto only talks about not increasing rates or bands and simplifying the system, people can “read between the lines”.
Statistics show thousands more taxpayers are moving to Scotland from the rest of the UK every year than leaving, debunking right-wing claims that the tax system – which sees most people pay less tax than they would elsewhere, but higher earners pay more – was making it difficult to recruit workers north of the Border.
But public finance minister McKee told the event, held in association with The Scotsman and Edinburgh Evening News, that the government had reached a point where it recognised people may be put off if there were any more hikes.
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He said: “We have made a commitment to simplify the tax system and not increase any rates or bands, so if you read between the lines on that then that does mean we will be potentially looking at some changes in terms of things aren’t going to go up and they are going to be simplified and you can reach your own interpretation.”
He said the government has kept a close eye cross-border movements to understand the impact of tax changes.
“We’re very conscious of understanding where those trigger points are and I think we’re clear we’re at that point and any further in that direction would potentially take you into a place where you would start to see those effects,” he said.
“But we haven’t seen those effects yet. In fact, if you look back over the last number of years, despite the tax increases, there has been about 20% more working age people moving from south of the border to north of the border than moving in the other direction in any given year.”
In the most recent UK Government data, covering 2022/23, there was a 73% increase on the number of UK taxpayers moving to Scotland compared to 2010/11. The number of taxpayers leaving Scotland to the rest of the UK also increased, but only by 44%.
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Asked after the hustings whether the plan to lower income tax implied that the decision to raise it had been a mistake, McKee said: “The tax position has generated a lot of revenue which is used to support public services, but we also recognise there is a cost of living challenge.
“If you look at what we did last year, it’s important to recognise the UK Government froze all thresholds right across the piece; we increased significantly the thresholds at the starter and basic level, so we were doing what we could there to help those that are on lower incomes. We also increased the number of people that were paying less tax in Scotland than they are in the rest of the UK from 50 to 55%.”
McKee also said people were moving to Scotland for “many reasons”.
“If you look at the manifesto there’s a commitment in there to focus specifically on what we would need to do to attract even more people to support Scotland’s key growth sectors and that isn’t a simplistic tax cut. That’s about highlighting opportunities there are here – business opportunities, career opportunities and the social contract that can put a lot of money in people’s pockets by means other than tax cuts,” he said.
