Swinney sets out new Scottish taxes in first post-referendum budget

10 Oct 14
Scottish Finance Secretary John Swinney has announced the first Scottish taxes in more than 300 years in his 2015/16 Budget package in the Scottish Parliament at Holyrood.

By Keith Aitken in Edinburgh | 10 October 2014

Scottish Finance Secretary John Swinney has announced the first Scottish taxes in more than 300 years in his 2015/16 Budget package in the Scottish Parliament at Holyrood.

The Budget, the first since Scots rejected independence in last month’s referendum, implemented the first of the new tax powers devolved to Holyrood under the 2012 Scotland Act. The taxes, the first since the Union of the Parliaments in 1707, replace Stamp Duty and Landfill Tax with dedicated Scottish levies.

Stamp Duty gives way to a new Land and Buildings Transaction Tax, a more graduated and, Swinney said, progressive tax, which will kick in on properties worth more than £135,000, £10,000 above the level it is levied at in the rest of the UK. The tax, together with the Scottish Landfill Tax, both take effect next April 1. Holyrood control over the basic rate of income tax above 10p in the pound is due to take effect a year later.

Swinney told MSPs that the backdrop to his proposals was Westminster’s imposition of a 10% cut in Scotland’s spending budget over the next five years, including capital spending reductions of 25%.

However, he announced a £288m increase in health spending to just over £12bn.

In addition, the Budget announced £170m will be used to drive the integration of health and social care services; £81m to mitigate the effects of the so-called bedroom tax; £300m to extend free childcare, and £4.5bn of infrastructure investment, including new schools, college campuses and affordable homes.

Long-standing government commitments to freeze council tax, put 1,000 more police on the beat, set public sector pay deals at or above the Living Wage and guarantee to avoid public sector redundancies were reaffirmed.

Swinney called it a Budget for a prosperous and fairer Scotland.

‘The actions I have taken today demonstrate the values and priorities of the Scottish Government. We drive forward investment in our economy, we protect our NHS, we invest in our young people and businesses and we protect the most vulnerable."

His Labour Shadow, Iain Gray, said the Budget demonstrated the potency of a devolved Holyrood, but added: ‘The reality is that health spending in Scotland has not kept pace with spending in England, and we know Scottish Government plans are being worked on for £450m in cuts.’  This refers to a recent leak of internal NHS management documents suggesting  contingency planning for future cuts. 

For the Scottish Conservatives, Gavin Brown said the new property tax would penalise people buying homes worth more than £250,000 and almost double the stamp duty costs on properties above £400,000. He called it ‘an assault on aspiration’.

Both the Lib Dems’ Willie Rennie and the Greens’ Patrick Harvie welcomed a more progressive property transaction tax, but Harvie lamented the lack of plans for replacing the council tax: ‘There is talk today of a historic moment as new taxes are set, and yet the one major tax we’ve had control of since 1999 is the council tax, which remains unfair and unreformed.’

Scottish Trades Union Congress general secretary Grahame Smith also called for reform of the council tax, though he welcomed Swinney’s announcement of a review of local taxation in general.

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