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| SNP deal with Green party saves Scotland's budget | SNP deal with Green party saves Scotland's budget |
| (about 2 hours later) | |
| The Scottish government has done a last-ditch deal with the Green party to freeze the income tax band for higher earners in a £160m concession to save its budget. | The Scottish government has done a last-ditch deal with the Green party to freeze the income tax band for higher earners in a £160m concession to save its budget. |
| It is understood that Derek Mackay, the Scottish finance secretary, will confirm later on Thursday that Nicola Sturgeon’s government will hold the top 40% rate of income tax at its current threshold of £43,000 in order to win crucial support from the Scottish Greens’ six MSPs. | It is understood that Derek Mackay, the Scottish finance secretary, will confirm later on Thursday that Nicola Sturgeon’s government will hold the top 40% rate of income tax at its current threshold of £43,000 in order to win crucial support from the Scottish Greens’ six MSPs. |
| The deal follows a rare parliamentary defeat over the Scottish government’s £31bn budget, when all four opposition parties united to vote against the government in a non-binding motion tabled by Scottish Labour which rejected the draft budget. | The deal follows a rare parliamentary defeat over the Scottish government’s £31bn budget, when all four opposition parties united to vote against the government in a non-binding motion tabled by Scottish Labour which rejected the draft budget. |
| With Sturgeon only commanding 63 votes in Holyrood, two short of an overall majority, she has to rely on support from at least one other party. The Scottish Liberal Democrats, with five MSPs, have refused to compromise. | |
| The concession is expected to increase government spending in Scotland by about £160m, and will provoke Tory accusations that Scotland is now the most expensive area of the UK for personal taxation. The 40% band for income tax payers in the rest of the UK will be raised to £45,000 in April, cutting taxes for higher earners. | The concession is expected to increase government spending in Scotland by about £160m, and will provoke Tory accusations that Scotland is now the most expensive area of the UK for personal taxation. The 40% band for income tax payers in the rest of the UK will be raised to £45,000 in April, cutting taxes for higher earners. |
| Using new powers which allow Holyrood to set its own income tax bands and rates, the first minister had originally planned to increase the 40% Scottish income tax band by inflation, taking it to £43,387. | Using new powers which allow Holyrood to set its own income tax bands and rates, the first minister had originally planned to increase the 40% Scottish income tax band by inflation, taking it to £43,387. |
| She had vigorously objected to accusations by Scottish Labour, Lib Dems and Scottish Greens that she was passing on Tory austerity by failing to use those tax powers to fix a new 50% top rate of tax to fund hundreds of millions of pounds of new spending. | She had vigorously objected to accusations by Scottish Labour, Lib Dems and Scottish Greens that she was passing on Tory austerity by failing to use those tax powers to fix a new 50% top rate of tax to fund hundreds of millions of pounds of new spending. |
| While the expected deal falls far short of the Scottish Green party’s demands for a new additional rate of 50%, this compromise has clear political advantages for the SNP and the Greens. | |
| The agreement will strengthen the bonds between the two pro-independence parties since Sturgeon also needs Green votes to guarantee she can pass any new legislation calling for a second independence referendum, or controversial motions refusing to endorse the article 50 vote in Westminster. | The agreement will strengthen the bonds between the two pro-independence parties since Sturgeon also needs Green votes to guarantee she can pass any new legislation calling for a second independence referendum, or controversial motions refusing to endorse the article 50 vote in Westminster. |
| Meanwhile the Scottish Greens need the votes of SNP supporters in May’s local council elections, which are fought on a proportional system in multi-member wards. A battle over Sturgeon’s budgets would have alienated potential voters. | Meanwhile the Scottish Greens need the votes of SNP supporters in May’s local council elections, which are fought on a proportional system in multi-member wards. A battle over Sturgeon’s budgets would have alienated potential voters. |