Exclusive:SNP poised to draw up wealth tax plans to tackle incoming £8.8bn benefits bill

Anas Sarwar has thrown cold water on one of his own MPs bidding for a wealth tax to be introduced at Westminster, with the Scottish Labour leader warning it could put off investment.

Amid concerns over the already-high tax burden, Scotland on Sunday has been told there are “no compelling reasons to believe a wealth tax cannot be reconciled with a strong and growing economy”.

SNP Finance Secretary Shona Robison has ruled out hiking income tax until at least the 2026 Holyrood election - with it believed the lever has been used to its full extent to generate revenue, and some analysis suggesting it may be having a detrimental impact on receipts.

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But the Scottish Government faces a spiralling bill for social security payments in the coming year. The price tag for benefits is set to make up 14 per cent of the 2025/26 budget. The £5.3bn spent on social security in 2023/24 is forecast to soar to £8.8bn by 2029/30.

SNP ministers have also pledged to implement a policy to mitigate the two-child benefit cap without allocated funding, which is expected to cost an extra £155m if introduced in 2026/27, rising to £198m by 2029-30, according to research by the Scottish Fiscal Commission.

In response to the financial pressures on the horizon, Ms Robison has now raised the prospect of asking the UK government to grant devolved powers to introduce a wealth tax along with other potential options such as a carbon land tax.

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A wealth tax would be applied to someone’s net worth or assets.

But Ms Robison has insisted that introducing any form of wealth tax “will not happen in the short term and will not raise revenue in this session of parliament”.

She pointed to the Scottish Government’s tax strategy, published alongside the draft Budget and raised the prospect of a move “to get additional powers through agreement with the UK government on wealth taxes”.

If the UK government was to turn down an appeal for a wider wealth tax, Scottish ministers could introduce a tax on wealth, provided it is implemented as part of the local tax system. But Ms Robison has signalled that no overhaul of the long-delayed council tax reforms will take place until after the Holyrood election.

But a separate bid for a wealth tax has been launched by a Scottish Labour MP who has called on his party to adopt the policy, arguing it could have helped avoid the issues plaguing Chancellor Rachel Reeves in the past week.

Brian Leishman, the Labour MP for Alloa and Grangemouth, claimed a two per cent tax on the wealthiest could help fix growing inequality, and was a policy popular with voters.

The STUC has modelled a two per cent wealth tax for families with wealth of more than £5m, estimating this would raise £1.4bn.

Urging Scottish Labour to adopt the policy at the party’s conference in Glasgow next month, his call comes despite opposition from the Scottish Labour leader.

Speaking to Scotland on Sunday, Mr Leishman challenged the argument it would see the biggest companies leave Britain, and insisted the economic policies of the last 17 years had failed to support the most vulnerable.

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He said: “I think when we look at the last 14 years of austerity of the Conservative government and 17 years of SNP disinvestment, especially in local services in Scotland, I think it's fair to say that Britain is one of the most unequal societies now in the world.

“This inequality in wealth then filters down into other inequalities, primarily at its most base form, health. We're now in a position where life expectancy in Scotland is decreasing with the advances in medical technology that we have. That doesn't tally up.

“In order to equalise society, eradicate poverty and improve social mobility for the many people in society that need it, an annual wealth tax at two per cent on multi-millionaires and the international billionaire class. Let them pay.”

Following a difficult week for the Chancellor, with pressures on the public finances increasing after government borrowing costs hit their highest level for several years, Mr Leishman suggested the problems could have “undoubtedly” been avoided with a bolder economic policy.

He also expressed hopes his party would return to the idea, despite it being dismissed by the Scottish Labour leader.

Speaking to Scotland on Sunday, Mr Sarwar said: “My fear would be that if we go down an ideological route where in actual fact we need to expand the level of middle earners in Scotland, as well as those big businesses - we don't have the same lumber and level of big businesses as for example, the City of London.

“It could inadvertently damage us here in Scotland.

“Instead, we have to use the levers that we have - whether that be around tax, planning, around our taxes system, our enterprise agencies, around regional economic development “

Scottish Conservative shadow finance secretary, Craig Hoy, said: “Scots are already the highest taxed residents of the UK under the SNP, yet Labour wants to hammer them even more.

“The left-wing parties’ only answer to fixing the financial mess they have created is seemingly to impose more and more tax rises, without realising the damage it will do to Scotland’s economy.

“Scots have paid through the nose in their tax bills only to see public services getting worse.

“It is time for the SNP and Labour to accept their approach isn’t working.”

Stephen Boyd, director of the IPPR Scotland think-tank, said that “the design and implementation of any new wealth tax in Scotland will require very careful consideration”.

He said: "Significant new wealth taxes are not an option in the short term.

“The abject failure of successive governments to reform council tax reflects the difficulty of taxing wealth as do the problems experienced by the UK government after introducing largely sensible and moderate changes to capital gains and inheritance taxes in the autumn Budget.”

Mr Boyd added: "The relationship between taxation and economic growth is complex but what is abundantly clear is that countries with higher total tax revenue to GDP ratios than Scotland also manage to sustain higher GDP per capita while accommodating more dynamic, productive and innovative private sectors.

“There are no compelling reasons to believe a wealth tax cannot be reconciled with a strong and growing economy".