Now even the SNP's own MSPs agree the party's punitive higher tax rates are 'ludicrous'

Urgent action is needed to address 'ludicrous' marginal tax rates, according to an SNP-led committee.

The Scottish Parliament's finance committee highlighted concerns about the damaging combined impact of income tax, which is controlled by Holyrood, and national insurance, which is reserved to Westminster.

It also said it is 'deeply concerned' about the SNP Government's strategic approach to public finances.

Earnings between £43,664 and £50,271 are now hit with a 50 per cent marginal tax rate when the two levies are combined, while incomes between £100,001 and £125,140 face a 69 per cent marginal rate.

Scots face much higher marginal rates of tax as a result of changes to income tax imposed by the SNP Government in recent years.

The finance committee quoted evidence from Professor David Heald, of Glasgow University's Adam Smith Business School, who told MSPs that the high marginal tax rates in Scotland were 'ludicrous' and undesirable.

The committee report, published today (THUR), said: 'As a matter of urgency, the committee asks the Scottish Government to work closely with the UK Government to address current anomalies relating to marginal tax rates in Scotland.

'The forthcoming Tax Strategy should specify that, when developing future tax policy, the Scottish Government should assess how individual rates and bands in Scotland would interact with the UK-wide tax system, to avoid such significant issues arising in the future.'

When income tax and national insurance payments are combined, taxpayers with six-figure salaries pay a 69.5 per cent marginal tax rate on earnings between £100,000 and £125,140.

On this part of their salary, they pay a 45 per cent income tax rate because of changes introduced in the last SNP Budget.

In addition, the tax-free personal allowance, which is controlled by the UK Government, is withdrawn at a rate of £1 for every £2 earned for this section of their income, which takes the overall income tax rate to 67.5 per cent, while national insurance is charged on two per cent of these earnings.

The finance committee called for the Scottish Government's tax strategy to improve data and evaluation of behavioural change caused by its approach and to add a new 'competitiveness' principle when setting rates.

It also urged ministers to learn from Estonia's 'simple and competitive tax system', following concerns about the complicated six-band system in Scotland.

The cross-party group of MSPs also said it is 'deeply concerned' about the Scottish Government's lack of a strategic approach to its finances, saying there is little evidence of ministers taking a long-term view of managing the public purse.

Committee convener Kenneth Gibson said: 'Our committee is deeply concerned about the Scottish Government's lack of strategic approach to managing Scotland's public finances. There is little evidence of medium and long-term financial planning.

'Year-on-year budgeting has become increasingly challenging, with significant emergency controls being required in each of the last three years.

'We recognise devolved governments have fewer flexibilities to deal with 'shocks'. However, many issues impacting the 2024-25 Budget - such as higher than anticipated pay settlements and increasing social security payments - could have been foreseen and mitigated when the Budget was set, last December.'

Scottish Conservative finance spokesman Craig Hoy said: 'This damning report highlights the gross financial mismanagement from the SNP that is continuing to deeply damage Scotland's economy.

'The public will be alarmed that the committee have confirmed the lack of long-term financial planning from SNP ministers.

'That has created an ever-growing black hole in Scotland's finances which has resulted in our public services facing savage cuts and economic growth remaining sluggish and below the rest of the UK .

'Yet the only answer from the SNP has been to continually hit Scots with more taxes, which are the highest in the United Kingdom.

'The left-wing economic consensus at Holyrood means that Scots are paying more and getting less. This official report must be a wake-up call for SNP ministers to change that approach and ensure they deliver the best value for taxpayers.'

A Scottish Government spokesman said: 'The Scottish Government has a strong record of balancing its Budget every year.

'However, this has been increasingly difficult in the face of high inflation, the effects of Brexit and under-investment by the previous UK Government, so difficult choices have had to be made.

'Ministers continue to do all they can to ensure public finances are sustainable, despite the significant uncertainty around funding from the UK Government in the medium to long term.

'We are delivering our medium-term financial strategy alongside our programme of public service reform, which will improve outcomes, reduce inequalities, bring down costs and reduce long-term demand.

'Scottish ministers will give this report careful consideration and will respond to the Committee after the 2025-26 Scottish Budget is published, in line with normal practice.'