Scots face eye-watering ‘85% tax rate’ under SNP’s ‘incompetent’ £58bn free income plan

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Universal basic income removes ‘incentive’ says analyst

The SNP put the policy in their Social Justice and Fairness Commission report and said it would replace all forms of benefit as well as a state pension. The report did not state how much the policy would cost, which includes two tiers, high and low.

 

The report said: “Our goal is to eradicate poverty by ensuring everyone in Scotland reaches the agreed minimum income.

“UBI is a potential means through which to achieve this aim.”

But the Fraser of Allander Institute who crunched the numbers for a potential scheme for Scotland said the scheme would be an “expensive policy”.

The analysis, published by economist Emma Congreve, said the scheme could cost up to £58billion per year.


 

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The Fraser of Allander Institute examined the proposal (Image: Getty)

Nicola Sturgeon briefing.

Liz Smith MSP, Scottish Tory finance spokesman (Image: Getty)

In their analysis, the institute claimed the cost of the lower tier of basic income would be £27billion.

In the lower tier basic income, modelling in the analysis suggests £84.54 a week would be given to Scots under 20, £57.90 for those aged 20 to 24, £73.10 for those 24 to older and £163 for pensioners.

The lower tier calculations were based on a model aimed to replicate the main means-tested standard allowances available in the current social security system in Scotland.

Meanwhile, the cost of the higher tier basic income was estimated to be £58billion.

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The policy was put forward in the party’s Social Justice and Fairness Commission (Image: Getty)

For the higher tier, Scots under 16 would be given £120.48 per week, £213.59 would be given for those aged 16 and above, and £195.90 for pensioners.

The higher tier calculations were based on a more generous payment, set at the Joseph Rowntree Foundation’s Minimum Income Standard.

The Foundation’s Minimum Income Standard in 2020 states a single person needs to earn £19,200 a year and a couple with two children each need to earn £18,700.

Based on the calculations, Ms Cosgrave said the lower tier of UBI would be funded by an 8 point rise in every tax band.

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SNP MSP Neil Gray defended the policy (Image: Getty)

That would mean that the first £1 of income earned would mean a 27p paid in tax rising to 54p in for the top rate.

For the high tier UBI, the tax schedule would start at 58p for the first £1 of income earned, and rise to 85p per for the higher and top rate.

Based on the data, Ms Cogreave, a Knowledge Exchange Fellow in Economics suggested a more targeted policy that should only include Scots on lower incomes would be more effective.

A separate Scottish Government study at a cost of £250,000 also recommended Scots are paid £11,000 a year as part of a £186million experiment.

What is Universal Basic Income?

The study revealed that this could take place as part of a three-year pilot by the Scottish and UK Governments alongside local authorities.

The three-year pilot would understand the impact of a basic income on poverty, unemployment, health and financial wellbeing.

Under the proposal, around 2,500 people would be paid a “high level” income of around £213 a week for a working-age adult, at a cost of £62m.

A further 14,600 people would be paid a “low level” which would be based on existing welfare payments, costing £124m.

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All Scots will be given an income under the plans (Image: Getty)

Liz Smith MSP, Conservative finance spokeswoman and Mid Scotland and Fife MSP, said: “‘It’s staggeringly incompetent to put forward a proposal that would most likely make Scots worse off, including people struggling on lower incomes.

“Such a shortsighted plan could see ordinary people face eye-watering tax bills with no rise in the quality of their lives or the standard of local public services.”

In response, SNP MP Neil Gray, who represents Airdrie & Shotts, said: “The SNP has long called on the UK Government to introduce a basic income pilot scheme in Scotland, which we believe would ensure a strong, fair and progressive recovery from the pandemic.

“Across the United Kingdom, too many people are living with the constant pressure of poverty.”



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