The SNP /Green Government is considering higher income tax rates for Scots earning over £43,663 in a bid to shore up public services. Ministers are looking at whether to put up the 41p and 46p rates in next week’s Budget.

Acting Finance Secretary John Swinney is facing one of the toughest budgets of the devolution era due to inflation and having to fund public sector pay deals. Senior figures in the Government are looking at how to raise extra cash through devolved taxes.

Under the current system, Scots pay a 41 per cent “higher” rate on income between £43,663 to £150,000. It is understood there are around 478,000 taxpayers north of the border paying it. A top rate of 46p applies to income over £150,000.

It is understood the Government is examining an increase in both rates, with an insider saying that raising the 41p rate would generate “serious” money. According to research by the IPPR think tank, every half percentage point increase on the higher and top rates of income tax would raise an extra £100 million.

They also estimated that the same sum would be raised if the top rate rose by 2 percentage points. In its own Budget, the UK Government lowered the threshold at which wealthier people pay the top rate in England from £150,000 to £125,140.

The Scottish Government is believed to back this change in principle. At a rally outside Holyrood yesterday, STUC General Secretary Roz Foyer said Ministers would let down ordinary workers if they ignored tax reform in the Budget.

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