Tom Gordon and Michael Settle
BORIS Johnson has been branded a “bigger threat to the Union than the SNP” after setting out a plan that would see middle class Scots fund a tax cut for the richest people in the rest of the UK.
The Tory leadership frontrunner came under sustained attack over a £9.6 billion giveaway for three million high earners that would widen the tax gap between Scotland and England to £8000 a year.
His plan to raise the threshold at which people pay the higher rate of income tax to £80,000 would be partly paid for by changing employee national insurance contributions [NICs].
But while income tax is devolved, NICs are reserved to Westminster, limiting Holyrood’s room for manoeuvre and creating a 53 per cent marginal tax rate for thousands of Scots.
The Chartered Institute of Taxation said the NIC changes would see high earning Scots pay up to £3000 a year more than at present.
However, combined with income tax cuts south of the border under the Johnson plan, this could widen the gap between high earning Scots and their counterparts in England from £1500 to around £7850 a year.
The Institute for Fiscal Studies said the biggest beneficiaries of the plan would be wealthy pensioners and those living off investments who do not pay NICs.
This group includes many of the elderly Tory party members the former Foreign Secretary is trying to woo in his bid to replace Theresa May.
Labour’s Ian Murray said Mr Johnson was “playing fast and loose with the Union” and urged Scottish Tory leader Ruth Davidson to distance herself from the plan.
“Boris Johnson is a greater threat to the Union than the SNP,” declared the Edinburgh MP, adding: “The fact hard-pressed workers in Scotland would pay towards the tax cuts is a double blow and will create deep divisions within the Union.”
His colleague John McDonnell, the Shadow Chancellor, said the “hand-out to high earners” at a time of crumbling public services showed just how “out of touch” Mr Johnson was.
His tax plan was also condemned by others bidding to become Prime Minister.
Environment Secretary Michael Gove said he would never use the tax and benefit system to give tax cuts to the already wealthy, adding: “The poor must come first.”
One Tory MP told The Herald Mr Johnson had not passed his policy through the “prism of the Union” while a senior Conservative MSP was blunter: “Boris has f****d up.”
Angela Constance for the SNP said Mr Johnson’s “latest wheeze” provided an appalling insight into the future of the country if he got his way.
The fact Scottish taxpayers would pay for a tax cut for Mr Johnson and his cronies would be “entirely indefensible and is only likely to see a further rise in support for independence, which would give Scotland full powers over tax,” added the MSP.
A spokesman for the Tory leadership candidate responded, saying: “It’s up to the SNP whether they follow Boris’s leadership or continue with their policy of holding Scotland back as the highest tax part of the UK. We urge them to follow Boris’s lead.”
Mr Johnson’s proposal is to raise the threshold for the higher rate of income tax - £43,430 in Scotland - from £50,000 to £80,000 in the rest of the UK. It would be partially paid for by raising the NICs’ rate and by money earmarked for Brexit contingencies.
However, because Holyrood only has control over income tax - NICs are reserved - it could create a huge difference in total tax rates across the border.
South of it, people earning between £50,000 and £80,000 would pay 20 per cent income tax and 12 per cent NICs; a marginal rate of 32 per cent.
But in Scotland, if Holyrood left the current tax rates unchanged, people earning between £43,430 and £80,000 would pay 41 per cent income tax and 12 per cent NICs; a marginal rate of 53 per cent.
The Chartered Institute of Taxation said, if enacted, it would likely throw into “sharp focus” the growing cross-border tax divide while the Fraser of Allander Institute at Strathclyde University suggested such a substantial tax cut across the UK could “lead to pressure on the Scottish Government to at least partially follow-suit”.
Last night, the Tories’ 1922 backbench committee confirmed 10 candidates had received enough nominations to be in the first round. Former minister Sam Gyimah pulled out because he had not received enough support.
Earlier, four candidates launched their campaigns.
During his Mr Gove mocked Mr Johnson, saying if they were the two final candidates, he would tell him: “Whatever you do, don’t pull out”; a reference to how the London MP dramatically withdrew from the contest to succeed David Cameron after the Scot and fellow Leave campaigner said he was not fit to be PM.
Jeremy Hunt, portraying himself as the unity candidate, received two boosts with the endorsements of Amber Rudd and Penny Mordaunt, the respect Secretaries of State for Work and Pensions and Defence.
Dominic Raab, the former Brexit Secretary, painted himself as "the conviction Brexiteer with a plan" while Matt Hancock, the Health Secretary, pledged to increase the pay of people on the living wage by £3,500 a year.
Rory Stewart, the International Development Secretary, will launch his campaign on Tuesday, when the first hustings before MPs will take place. The first round vote is on Thursday.
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