SNP Finance Minister Derek Mackay is looking over plans to raise the top rate of income tax to 50p, despite warnings from inside Mrs Sturgeon’s Government the hike could cost the country £30million as tax burdened Scots could move south to England.
Mr Mackay defended the proposal, claiming despite warnings of a “revenue risk”, the tax hike could go ahead if officials “are sufficiently assured” any economic damage could be limited.
He said: “Analysis produced by the Scottish Government showed that there is a revenue risk associated with raising the additional rate.
“However, the First Minister has asked the council of economic advisers to consider how and to what extent this risk can be mitigated, and if we are sufficiently assured that it can be, that we consider raising the additional rate from 45p to 50p from 2018-19 onwards as part of budget considerations.”
But the Scottish Conservatives’ Shadow Finance Minister Murdo Fraser claimed the plan, which would see anyone earning over £150,000 saddled with increased taxation, would be a “huge mistake”.
Mr Fraser said: “The SNP has already made Scotland the highest-taxed part of the UK.
“This damaging move would take that to a new level.
“There is absolutely no reason why Scots should have to pay more tax than other workers across the UK.
“Increasing taxes will punish workers, harm the economy and raise less money, and the SNP would be making a huge mistake if it adopted this policy.”
It comes as economic figures reveal Scotland is at risk of slipping into recession.
The SNP’s Andrew Wilson, who was handpicked by Mrs Sturgeon to lead a commission focused on revitalising the nation’s sluggish economy, has warned the First Minister’s Government needs to better understand tax incentives.
Mr Wilson claims in order to “sustainably” increase the cash flow from Scotland’s high earners, Mrs Sturgeon’s Government would be better off doubling the number of taxpayers in the top bracket.
Middle-class earners in Scotland are already expected to pay £400 more in income tax than those in England after the SNP finance minister froze the threshold for the higher 40p rate at£43,000.