Finance Secretary Derek Mackay has announced £220million of extra public spending
Derek Mackay's Budget narrowly survived a crunch vote as he lurched to the Left and punished the middle class further to secure their support.
The Finance Secretary ignored warnings from business leaders over the threat to the economy by freezing the threshold for the 40p rate of income tax at £43,000.
Under yesterday’s pact, Mr MacKay announced £220million of extra public spending, including £160million for councils.
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Scotland was already on course to become the highest taxed part of the UK from April with plans to increase the 40p threshold by inflation.
But by abandoning this higher-rate, taxpayers will now pay £400-a-year more than those on the same salary in England, where the threshold is increasing to £45,000.
Some 368,000 Scots will be affected by the grab but more could be pulled in because of so-called "fiscal drag".
And by 2020, workers here could be £1,400 worse off than south of the Border as the UK Government raises the threshold to £50,000.
What a pity, what a tragedy for Scotland
Scottish Tory finance spokesman Murdo Fraser
Hitting out at plans, Scottish Tory finance spokesman Murdo Fraser said the SNP had chosen to "embrace the anti-business, anti-growth agenda of the Greens".
He told MSPs: "What a pity, what a tragedy for Scotland that he chose to throw in his lot with the lentil munching, sandal wearing watermelons on that side of the chamber."
Patrick Harvie claimed to have secured the biggest compromise in 'the history of devolution'
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The minority Government originally planned to raise £79million through its income tax plans but will now claw-in another £29million.
The extra £191million of 2017/18 spending will come from this year's underspend and changes in accounting.
It came only a day Green co-convener Patrick Harvie said he had been “disappointed” by Mr Mackay’s refusal to consider a more radical overhaul of income thresholds and rates.
Yesterday, Mr Harvie admitted the minister had given away far less than he had wanted but claimed to have secured "the biggest Budget compromise in the history of devolution".
He added: "This is not a budget I would have written, but nobody who cares about protecting public services in Scotland can look at that extra £160million investment and say, no thanks, I'd rather just keep ranting and make no difference in people's lives."
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Nicola Sturgeon visits Glaxo Smith Kline.
But during a fiery Holyrood debate he came under fire from Left-wing rivals, who had wanted more a radical use of new powers.
Scottish Labour leader Kezia Dugdale said the move by the Greens was "astonishing and deeply disappointing".
She added: "Let's not kid ourselves, this isn't the Greens' responsibility to Parliament shining through, it's the responsibility they have put on themselves to do nothing which might jeopardise the prospect of another divisive independence referendum."
Talks with the Lib Dem's had earlier collapsed with after they were offered just £70million of a £400million spending demand.
Leader Willie Rennie said MSPs should "no longer listen to lectures from Patrick Harvie about austerity and compassion".
Scottish Labour leader Kezia Dugdale said the move by the Greens was 'disappointing'
Mr Mackay insisted "99 per cent of taxpayers" on the same income will pay no more tax next year and said his goverment "has listened and acted" following a "constructive approach" by the Greens.
He said: "At a time of significant challenge in our economy, this is a Budget that will support jobs and lay the foundations for future growth.
"By any measure, this Budget delivers for Scotland."
But Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: "Having a higher burden of taxation in Scotland than in the rest of the UK, whether that be business rates or income tax, will ultimately drive away investment and cost jobs. The Scottish economy is already underperforming the U.K. as a whole and business confidence is balanced on a knife edge.
"This deal will do nothing to lay the foundations for future business success."
Colin Borland of the Federation of Small Businesses said it would have "preferred" to see thresholds kept "aligned" with the rest of the UK.
He added: “At a time when weak consumer demand and the sluggish state of the domestic economy are dominating small business owners’ worries, it would have made sense to put some money into their customers’ pockets.”
MSPs backed the tax and spending proposals by 67 votes to 59.
A Labour amendment proposing an extra penny on the basic and higher rates of income tax, with the additional rate for those earning more than £150,000 increasing from 45p to 50p was defeated by 103 to 23.
The deal ensures Green support through the final parliamentary stages and votes later this month.
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