14p in the pound income tax rise if SNP win warns Reid


Income tax would soar by 14 pence in the pound if Scotland had faced collapsing oil prices alone and the Scottish Government used income tax to plug the budget black hole, said Alan Reid MP.
 
Under questioning from the Argyll and Bute MP, at last Wednesday's meeting of the Scottish Affairs Select Committee in the House of Commons, financial experts revealed the appalling price Scots would have to pay if SNP's plans ever became reality.
 
The SNP had gambled on oil staying at $110 a barrel in all of its financial models. Now that it is down to $50 a barrel, their plans would place a huge burden on Scottish tax payers. Cutting government jobs and services to the bone was the only alternative to a massive tax hike.
 
A Scottish finance minister would have the choice between cutting £7 billion from the annual budget or increasing every tax paid by Scots by 15 per cent. If the extra burden was put on income tax alone, the basic rate would go up from 20 pence to 34 pence in the pound. The alternative would be drastic spending cuts, equivalent to the entire education budget.
 
With the "full fiscal autonomy" proposal in the SNP manifesto, these cuts would apply whether Scotland was independent or still in the UK, said Mr Reid, because the SNP wants to replace the Barnett formula with oil revenues. The Barnett formula for spending on public services gives Scotland more than £1,500 extra per person to spend compared to England. On the other hand, oil revenues have nearly disappeared.
 
The price of Brent Crude dropped to $50 leaving a £7 billion spending black hole in the figures used by the SNP during the referendum.

 

After the committee hearing Mr Reid said: "These expert witnesses [1] revealed what a narrow escape we had last September when the NO vote won the referendum, but another threat is just round the corner.
 
"The SNP is going into May's election with the crazy plan to replace the Barnett formula with collapsing oil revenues. There is a high risk that if the SNP win most of the seats in Scotland in May, the new UK government will give them what they are asking for and we will be faced with paying 14 pence more in the pound income tax. Scotland cannot afford the costs of an SNP victory.
 
"Throughout the referendum campaign the SNP asked people to vote yes to a budget based on peak production and prices from 2011. This is 2015 and the financial position is completely different. Scotland has had a lucky escape. The collapse of the Royal Bank of Scotland pales into insignificance beside the collapse in the price of oil. The words 'Better Together' have never rung more truly."
 
NOTES
[1] The expert witnesses were Professor John McLaren, hon Professor of Public Policy, Adam Smith Business School University of Glasgow and David Philips, senior research economist, Institute for Fiscal Studies.

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