SCOTTISH Labour’s plans to increase income tax could reduce the expected budget cuts by a third, according to new research published yesterday.

The Resolution Foundation, a think tank specialising in tax and income, said the proposed 1p income tax rise could raise £475 million and offset budget cuts faced by the Scottish government by a third.

Scottish Labour argues that the increase will help counteract austerity and protect public services, but the plans were rejected by Holyrood this week.