John Swinney has declined to exclude the possibility of freezing tax thresholds in the upcoming Scottish Budget. The First Minister stated that he would not provide details of what may be included ahead of time, highlighting that decisions made by the UK Chancellor at the end of the month would significantly influence the Scottish Government’s announcements in December. Following his speech at the Edinburgh Futures Institute, Swinney faced questions from reporters about the potential freezing of tax thresholds in Scotland.
He asserted, “I’m not going to rule anything in or out about the budget,” emphasising the interconnected nature of the UK Government’s choices and the decisions the Scottish Government is grappling with. Swinney acknowledged that the UK Budget outcomes would be pivotal in shaping the Scottish Budget to be presented on December 4. In the previous Scottish budget, the thresholds for lower income tax bands were adjusted in line with inflation, while the thresholds for higher and top rates remained constant.
When pressed on whether freezing thresholds could effectively raise taxes for workers, Swinney acknowledged the impact on some individuals. The Labour Chancellor, Rachel Reeves, is aiming to generate up to £40 billion through tax increases and spending adjustments in the autumn Budget. However, internal discord within her party has emerged due to the expectation to reduce spending by as much as 20%.
Swinney cautioned against a hike in employers’ national insurance without adequate compensation for public bodies, such as the NHS and local councils. He underscored that any increase in this regard would lead to higher tax bills for public sector entities unless public expenditure rose significantly to offset the additional costs. Swinney urged for transparency in communicating the consequences of such decisions to the public.
The Scottish public will have to wait until the Budget announcement to know the final decision regarding tax thresholds. Stay tuned for further updates on this developing story.