Nicola Sturgeon and Humza Yousaf are embroiled in a tax avoidance row (Image: Getty)
and have become embroiled in a tax avoidance row which has seen the accused of hypocrisy.
Scottish Finance Secretary Shona Robison refused to comment on claims the two former First Ministers were trying to “potentially avoid” paying more tax via a legal scheme.
Ms Sturgeon and Mr Yousaf presided over significant tax hikes on middle earners in Scotland, insisting those with the biggest shoulders should pay more.
Both have created limited public companies for external earnings, paying 25% on their profits, which can be taken as dividends and are not subject to National Insurance.
Scottish Conservative MSP Murdo Fraser asked Ms Robison whether she believed this was “hypocritical” in a Holyrood clash on Tuesday (November 19).
He asked: “Would the Cabinet Secretary agree with me that any MSP or even any former First Minister who voted for these crippling and counterproductive tax hikes on higher earners, and who then sets up a private company into which future earnings will be paid, potentially as a means of avoiding those higher taxes they voted for, is guilty of the most outrageous hypocrisy?”
Ms Robison, who is pals with, and long-term allies, Ms Sturgeon and Mr Yousaf, said she was not going to comment on anybody’s individual circumstances or positions on such matters.
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Shona Robison is friends with Humza Yousaf (Image: Getty)
rebel, Fergus Ewing, asked Ms Robison if she is concerned the overall tax revenue from income tax is being reduced by “some people” who choose to set up a limited company and then appear able to insert into that company income from book royalties or TV appearances, thereby reducing their income tax liability.
Ms Robison refused to be drawn on specifics, insisting she is working with to support “very strong” measures to tackle tax avoidance and evasion, according to the .
She argued there has been no evidence Scottish taxpayers are more likely to engage in non-compliant behaviour than in the rest of the UK.
The row came as MSPs clashed over an Institute for Fiscal Studies (IFS) report warning the tax changes may have “slightly reduced” revenues for Holyrood.
IFS experts stressed there is a “significant degree of uncertainty about the scale of effects”, but said two studies by suggest “previous increases in Scotland’s top rate of income tax will have slightly reduced revenues rather than slightly increased them”.
Mr Fraser, the Scottish ‘ economy spokesperson, said the warnings should come as a wake up call for the .
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Shona Robison was asked if she was concerned income tax revenues were being reduced by ‘some people’ (Image: Getty)
Ms Robison said: “The IFS were clear that they did not have any definitive evidence of any suggested reduction of revenue raised from the highest earners in Scotland in recent years.”
Mr Fraser said: “I would just quote directly from David Phillips of the Institute of Fiscal Studies, who said: ‘Increases of the top rate of tax are unlikely to raise much with evidence from the first of Scotland’s reforms in 2018/19 suggesting they may even reduce revenue.’ Those are his words, not mine.
“These warnings from the Institute of Fiscal Studies should be a wake-up call to the . For years, we warned that continually increasing tax on the highest earners will be counterproductive.
“The same message has come from Scottish business and now we hear from the respected and independent Institute of Fiscal Studies.
“So will the Scottish Government finally listen to all these warnings, put economic growth first in its forthcoming budget and commit to reducing the tax burden on hardworking Scottish families rather than further increasing it?”
Ms Robison replied: “Let me repeat, the IFS are clear that the uncertainties associated with the behavioural impact of our tax policy are very high indeed.”
Under the current tax regimes, people in Scotland earning £26,562 a year or more pay more income tax than those in the rest of the UK.
While someone with an annual income of £25,000 pays £23 a year less in Scotland than elsewhere in the UK, someone with an annual salary of £50,000 pays £1,540 a year more in Scotland.
This rises to £3,346 more for those earning £100,000 a year or higher in Scotland.