Scottish Nationalist Party (SNP) ministers are facing accusations of a significant fiscal misstep, with claims that they failed to consult their own independent tax advisors before raising the top rate of Scottish income tax. This decision, intended to fund public services, may have resulted in a loss of approximately £22 million to the public purse due to avoidance measures taken by high earners.
Dan Neidle, a member of the government's Tax Advisory Group, stated that the group was never consulted on the decision to increase the top tax rate. He suggested that the move was driven by factors such as "stupidity, cynicism, recklessness and virtue-signalling." Neidle's calculations indicate that the tax hike may have cost Scotland between £15 million and £30 million in its first year.
The Scottish Conservatives have criticized the SNP's tax strategy. Craig Hoy, the party's finance spokesman, called the revelations "bombshell" and an "act of utter negligence," questioning why advisors were not consulted before imposing higher taxes. He argued that the tax hike has led to less revenue for public finances, which he described as being in a "dire state."
SNP ministers raised the top rate of Scottish income tax to 48 pence on the pound for earnings over £125,140, an increase from the previous 47 pence. This contrasts with the rest of the United Kingdom's top rate of 45 pence. The decision was announced by then-Finance Secretary Shona Robison in December 2023 as part of the government's budget plans, with the stated intention that "those with the broadest shoulders should pay a higher rate of tax."
However, the Scottish Fiscal Commission, Holyrood's budget watchdog, had previously warned that the additional taxes could prompt the top 5% of earners to make "behavioural changes" to reduce their tax liabilities. The commission projected that the 48p rate would theoretically raise £53 million but only an estimated £8 million in practice due to avoidance.
Neidle, founder of Tax Policy Associates, was part of the SNP's Tax Advisory Group, which was established in July 2023 to provide advice on tax policy and strategy but was later scrapped. Speaking on the Holyrood Sources podcast, he questioned the rationale behind the decision, stating that "if you’d ask, frankly, any rational human being... who’s going to say, ‘Do this thing’?"
He outlined several possible explanations for the SNP's actions, including a lack of understanding, a willingness to gamble, cynical political positioning, or a progressive ideology that prioritizes the appearance of fairness over fiscal outcomes.
Scottish Labour finance spokesperson Michael Marra described the SNP's approach to public finances as "utterly chaotic" and called the tax rise a "performance gimmick."
Scottish Liberal Democrat finance spokesperson Liam McArthur expressed concern that the government did not consult its own advisors, stating that "taxpayers deserve value for money and confidence that their taxes are being spent wisely."
A Scottish Government spokesperson defended the decision, stating that tax decisions are made by the Cabinet and that the intention to increase the top rate was announced in parliament. The spokesperson added that tax rates are commercially and economically sensitive, and it is common practice to inform only the Scottish Fiscal Commission and HMRC before parliamentary updates.