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Scotland’s Finance Secretary says she may have to “potentially rethink” her tax plans amid the reports chancellor Will increase income tax in Budget This month.
Shona Robison said scottish government If there was a “very limited” set of levers to respond to Rachel Reeves Takes tax decision on 26 November.
Fraser of the Allander Institute has estimated that a 2p income tax rise in the UK budget could cut Scotland’s funding by £1 billion, because of the way the fiscal framework operates.
Ms Robison has requested an urgent meeting with the Chancellor, saying Ms Reeves should abandon her fiscal rules and instead deliver investment “to grow the economy and support people with the cost of living”.
Speaking to BBC Scotland’s Sunday Show, Ms Robison said the fiscal framework does not take into account changes to National Insurance – another levy the Chancellor is reportedly considering changing.
Fiscal framework controls the money coming to the public scottish Government, but Ms Robison said the system was now in “uncharted territory” as it did not envisage simultaneous changes to both income tax and national insurance.
Ms Robison was asked whether she would raise Scottish income tax rates in response to any income tax rises in the Chancellor’s Budget.
She said: “I am not going to be here today to tell what our plans are for income tax when we don’t know what we will face on the 26th…
“If we end up in this scenario, the levers available to us are very limited.
“Unless we are given flexibility through the fiscal framework – which would be my first question, we need that flexibility.
“Because we don’t want to raise taxes, we had already decided in the tax strategy that we wanted to see that stability until the end of this Parliament.
“But in the event of unanticipated extraordinary circumstances, obviously we would potentially have to revisit that.”
Under the devolution agreement, the Scottish Government has powers to adjust income tax rates north of the border.
A spokesperson for HM Treasury previously said: “Our record funding agreement for Scotland will mean 20% more funding per capita than the rest of the UK.
“We have also confirmed funding of up to £8.3 billion for GB Nuclear and GB Energy in Aberdeen, up to £750 million for a new supercomputer at the University of Edinburgh, and are investing £452 million over four years for City and Growth Deals across Scotland.
“This investment is possible because our fiscal rules are non-negotiable, they are the foundation of stability that underpins growth.”