Scottish Budget: Sturgeon ally behind case for indy attacks budget

Mr Wilson, an economist and a former SNP MSP, warned that jobs and public finances would be undermined by creating a new band for high earners while raising tax for those with an income over £125,000.

"Deeply serious risks to the Scottish economy, the health of the tax base and therefore jobs, public finances and services. Urgent rethink needed by Scottish Government to prevent material damage. High taxes ‘forcing doctors and finance workers to head south’," he wrote on X/formerly Twitter yesterday.

READ MORE: Scottish Budget: FM to escape revolt amid SNP 'high stakes'

His intervention follows warnings that doctors and finance specialists are likely to step down or choose to work elsewhere in the UK because of the higher tax regime.

Judith Cruickshank, chairwoman of the Scotland board at Royal Bank of Scotland, said UK-wide financial companies now found it a “challenge” to attract people north of the border while Iain Kennedy, the head of the BMA in Scotland, said one of the “unintended consequences” may see doctors leave the NHS to “jobs elsewhere or retirement — or force them to cut overtime”.

First Minister Humza Yousaf, centre, listens as his deputy Shona Robison, the finance secretary, delivers the Scottish Budget plans to Holyrood. Photo PA.

Other leading members of the Sustainable Growth Commission — which was set up in 2016 to make recommendations to the Scottish government on currency and economic policy in an independent Scotland — joined Mr Wilson in condemning the budget tax rises.

Roger Mullin, a former SNP MP, who as well as being a member of the growth commission was also heavily involved in the party’s governance review, criticised the tax increase.

READ MORE: Analysis: Fraser of Allander Institute on Robison's first budget

“The budget is certainly not helpful in terms of growth,” he said. “We need to prioritise growing the economy and the measures in the budget do not do that.”

Kate Forbes, the former finance secretary who narrowly lost the SNP leadership election which was won by Mr Yousaf, said the income tax changes would deter talented people from coming to work in Scotland.

“I think the key mission for Scotland has got to be investing in jobs and expanding the working age population in order to increase public revenue,” she told the BBC earlier this week. “That’s a far more successful route to increasing public revenue than purely increasing tax rates.”

READ MORE: Scottish Budget: Shona Robison and the 'tax and axe' budget

Michelle Thomson, the Falkirk East MSP, and Fergus Ewing, the former rural affairs secretary, have previously criticised plans to raise taxes for higher earners.

Ms Thomson last week echoed Ms Forbes’ complaint insisting the new tax band ran the risk of “introducing more complexity, at odds with the principles around tax that the Scottish Government set out, as well as creating the perception that Scotland is not open for investment”.

Mr Ewing said workers may move to England to avoid paying thousands more to the government. “Newly qualified doctors, for example, at the start of their career, may simply choose to leave Scotland and earn much more in England to help look after their families,” he said.

Senior SNP MSP Ivan McKee also expressed concerns last week saying saying the Scottish Government should focus on replacing council tax rather than increasing income tax.

READ MORE: Scottish Budget: £200m cut to housing condemned amid homeless crisis

The former business minister said it was time to scrap the “unfair” council tax in favour of a more progressive property charge.

At First Minister's Questions in Holyrood Douglas Ross, the Scottish Conservative leader, branded Mr Yousaf “high-tax Humza” and asked if he believed it was “fair” that many Scots pay more in tax.

Mr Yousaf dismissed Mr Ross’s claims that a “mass exodus” would follow the increase in taxation, and pointed to National Records of Scotland statistics from 2021 that showed there was net migration of almost 10,000 people north of the border from the rest of the UK.

However, while some SNP MSPs and business leaders are opposed to the tax rises for higher earners, polls on previous rises suggest the move could be popular among the wider population.

A YouGov survey in 2018 found that 54% backed the Scottish Government increasing income tax for higher earners, while 30% said they thought the measures would be "unfair".

Tuesday’s budget included plans for a new “advanced” 45% tax band for those earning between £75,000 and £125,140, while the top rate of tax for those earning above that was increased to 48%. The threshold for the higher rate was frozen at £43,663, which will mean more workers paying more tax as their salaries rise.

The tax changes aim to help plug a £1.5 billion funding shortfall, with Finance Secretary Shona Robison estimating that the new rate and changes to the top rate will generate about £80 million.

Workers earning more than £28,850 already pay more tax than those in the rest of the UK, while those under this threshold pay slightly less than their counterparts south of the border.

The SNP has pointed to more people moving to Scotland than leaving to settle in other parts of the UK arguing they are attracted north of the border because of the country's "social contract".

Figures from National Records Scotland show that since 2010, Scotland’s annual net migration from the rest of the UK has increased from 2,909 to 8,914.

In 2021, (the latest date for figures available) inflow from the rest of the UK increased by 34% from than the previous year, while 8,900 more people moved to Scotland from the rest of the UK than left.
Scotland’s 2022 census also recorded the highest ever Scottish population, as a direct result of inward migration. 

The SNP say that since coming into office in 2007 they have brought in a progressive tax system based on the principle that those with the broadest shoulders contribute a bit more to society and public services.

The party argues people in Scotland enjoy a range of benefits not available in England and Wales including free university tuition and free bus travel for under 22s.