'Now is not the time for Scots tax hikes', says Kate Forbes

Scots are unlikely to face tax rises or fresh austerity cuts in the coming budget, Finance Secretary Kate Forbes has said.

She told MSPs today that “now is not the time” to raise taxes, but to protect growth after the Covid pandemic.

Ms Forbes is devising her budget for 2021/21 to be published in January, but told Holyrood’s finance committee that tax hikes are unlikely.

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Kate Forbes has ruled out Scots tax hikes

Chancellor Rishi Sunak has already hinted he will not be raising taxes in the UK Budget, although this may happen in the longer term.

Ms Forbes said: "I'm very persuaded by pretty much every commentator right now and every think-tank from the IMF to others, they're very clear that now is not the time for fiscal consolidation.

"So now is not the time to increase taxation right across the board or indeed to cut spending. I think those two have to be seen hand in hand when it comes to managing our fiscal position.

"Obviously when it comes to the suite of powers required to manage the financial situation after this pandemic, most of those are reserved, although we have set out in the Fiscal Paths document as of June on what our intentions would be, if we were to have the power, what we would do and that includes rejecting austerity."

The Finance Secretary said the relative performance of Scottish taxation compared with the rest of the UK was "critical”.

This is an increasingly awkward issue for the Scottish Government, which is forced to set its spending plans before the UK Chancellor unveils his budget.

"We know particularly when it comes to income tax it's unavoidable that our income tax rates interact with what UK Government does with NICs [national insurance contributions], for example, what it might do in terms of additional allowances or tweaking incentives that they have,” she said.

"So we will have to bear two things in mind. One is that now is not the time for fiscal consolidation at a time when individuals and businesses need support.

"Secondly, understanding that in setting a tax before the UK Government, we have to have an eye on what they might do. And obviously as much intel I can get in advance, which is pretty much unlikely on tax policy, is going to be essential."

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