Swinney refuses to rule out freezing tax thresholds in the Scottish budget

John Swinney has refused to rule out freezing tax thresholds as a measure to boost the Holyrood Government’s revenue in the next Scottish Budget.

The First Minister said he would not comment in advance on what would be in the Scottish Budget.

He said the steps taken by the UK chancellor at the end of the month would have a big impact on what the Scottish government might announce in December.

Speaking at an event at the Edinburgh Futures Institute, Mr. Swinney urged Rachel Reeves to change its tax rules to allow more borrowing to finance public services.

He urged the Chancellor to raise the 3% limit on public sector borrowing while warning that an austerity approach would be “disastrous”.

Shona Robison, the Finance Secretary, announced up to £500 million in cuts in the summer to plug a financial black hole in Scotland’s finances.

Meanwhile, Ms Reeves has said she is facing a £22bn budget black hole left by the previous government.

Speaking to reporters after his speech in Edinburgh on Monday, the First Minister was asked if he could rule out freezing tax thresholds in Scotland.

“I’m not going to rule out anything in or out of the budget,” he said. “Obviously we have a process to go through that is heavily influenced by the outcome of the UK budget process.

“What I will say is that there is a clear interplay between where the UK government is, what options it faces and the issues we are grappling with.

“And obviously we will take all these issues into account in the run up to December 4 when we set our budget.”

In last year’s Scottish Budget, the threshold at which people start paying the lowest income tax brackets rose in line with inflation, but the highest rate threshold and top rate went maintain at the current levels of 43,662 and 125,140 pounds.

This was the fourth budget in a row that the top rate was frozen.

It means more Scots became eligible for these higher payments as wages rose.

Asked if he agreed whether the freeze thresholds would increase taxes on workers, Swinney said: “Obviously there will be some people who will be affected as a result of that, yes.”

Rachel Reeves wants to raise up to £40bn through tax and spending increases in her Autumn Budget 2024 at the end of the month.

But he has faced a backlash from within his own party with some disgruntled ministers being asked to cut spending by up to 20%.

The Chancellor is reportedly considering increasing National Insurance contributions for employers.

The labor manifesto had ruled out raising national insurance, personal income tax or VAT, but emphasized that it did not want to raise taxes on “workers”.

Swinney warned against an increase in employers’ national insurance without compensation for public bodies.

He said any increase would mean public bodies such as the NHS or councils footing a higher tax bill.

He said: “I can see where the UK government is going, but I’m just pointing out that if they’re going to go there, they need to be open with the people that they’re either increasing public spending to take account of it. or they are basically undermining public spending through the back door.

“Because if Employers’ National Insurance contributions go up in the UK, public sector bodies will have to pay for it.

“And unless public spending rises to a point to offset that and more, we’re actually no better off as a result.”

The UK government has been approached for comment.