Scotland should forge distinctive tax path, says Mackay

22 Mar 18

Scotland needs a distinctive approach to taxation if it is to fulfil its ambitions as a nation, according to finance secretary Derek Mackay.

Mackay told delegates at the CIPFA Scotland annual conference in Glasgow today that the Scottish Government was using its new powers under the Scotland Act in a “balanced and sustainable” way to stimulate the economy and protect public services.

“Those powers we are now using may well be creating divergence with the rest of the United Kingdom, particularly around taxation, but it’s because we are doing what is right, and using our fiscal powers to create the kind of society we believe Scotland wants to be,” he said.

“There is divergence because we believe Scotland seeks higher quality public services, social entitlement and a partnership that works for everyone in society.”

Describing himself as “the most empowered finance secretary Scotland has ever had”, Mackay said the decision to overhaul the Scottish income tax system, introducing two new bands while increasing the amount to be paid by those in the higher brackets, was based on a desire to create a more progressive tax system, support public services and protect lower income earners.

“You might have heard Scotland is the highest taxed part of the UK – it is not,” he said. Under the new system, 70% of people would be paying same or less tax, with those who could afford it paying more, making Scotland “the fairest taxed part of the UK”.

He also talked about the growing importance of partnership with the private sector, citing the “massive potential” of the growth accelerator model and City Deals.

Mackay admitted to having come from a left-of-centre “tribal” cynicism about the private sector.

“But over the course of being a leader you realise you can’t share the growth and the wealth if we’re not creating it, so collaborative partnership working with the private sector absolutely has to be there,” he told CIPFA delegates.  

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