Scottish and UK Governments must act on tax to address ‘soaring inequality’

Scales with heavy bank notes on one side and a few lighter coins on the other

The level of income inequality in Scotland has surged, new analysis of official data by Oxfam Scotland reveals. 

The figures, as measured by the Palma ratio, show that before housing costs are considered, the top 10% of the population had 34% more income than the bottom 40% combined in 2020-23 – up from 18% and the highest level since records began in 1994. 

Worryingly, after housing costs are considered, the data shows even worse income inequality, with the top 10% of households having 53% more income than the bottom 40% combined – up from 38% in 2019-2022 and the highest rate since 2007-2010.  

While levels of income inequality are known to fluctuate over time, the parallel Gini coefficient measure of inequality has also risen in the last two years.

Scottish Government data also shows median incomes before housing costs have continued to decline to levels not seen for nearly a decade, with lower and middle income households hardest hit while the highest earners have seen their median incomes maintained.

The analysis follows the news that Scotland’s poverty rate remains stubbornly high, with one in five people in Scotland trapped in poverty, including 240,000 children. Oxfam Scotland says entrenched and growing income inequality is undermining efforts to tackle poverty, and exposes an unacceptably unequal and unfair society.  

Oxfam Scotland says increasing income inequality, from already high levels, is intrinsically linked to Scotland’s widening and grotesque wealth gap, with levels of wealth inequality even deeper than those related to incomes.  

With much of the country’s wealth locked up in property, campaigners say that stagnant median wages and high house prices can make it virtually impossible for people on low incomes to get on the housing ladder and begin to narrow the wealth gap.  

Oxfam Scotland says that both the UK and Scottish Government must act to bridge the growing inequality divide while raising vital funds to invest in public services and support, which are particularly vital to those on low-incomes. 

While action is needed to ensure the economy better shares income and wealth, including through fair work, campaigners are calling for the UK Government to ensure the richest pay their fair share by implementing a range of common-sense tax reforms targeting capital gains, investment income and wealth. It is estimated that a UK Government wealth tax on British millionaires and billionaires at a rate of between one to two per cent on net wealth above £10 million could generate up to £22 billion each year.  

Oxfam Scotland says the Scottish Government – which has a national commitment to share wealth more equally – must act too, by using its forthcoming tax strategy to fundamentally rethink devolved taxes. The organisation says it must fully align them with its commitments to reduce poverty, including by prioritising meaningful reform of the outdated, unfair Council Tax instead of a rates freeze that does little for those on low incomes. 

While the Scottish Government has made some welcome steps forward in trying to level the playing field through fair changes to Income Tax, this has been undermined by handouts to the better off through the Council Tax rates freeze.  

Similarly, the UK Government’s upcoming cut to National Insurance from April 6 will disproportionately benefit the richest, while reducing revenue to spend on vital public services. 

Lewis Ryder-Jones, Oxfam Scotland Advocacy Adviser, said: “Inequality fuels poverty and harms Scotland’s economic prosperity: too many children born today have their future held hostage by the low income of their parents, their gender and their race. It’s morally grotesque that over a million people in Scotland are left locked in poverty while the gap between them and the richest grows ever wider. But it doesn’t have to be this way.  

“Our political leaders will continue to tread water on tackling poverty until they take bold steps to address inequality. The Scottish Government must press the UK Government to act while ensuring its own upcoming tax strategy charts a new course, ensuring that every part of the devolved tax system helps to reduce poverty and inequality. Such action isn’t just a moral imperative; it’s an economic necessity. No longer can our economy be built on the survival of the richest.” 

Oxfam Scotland’s latest analysis builds on growing momentum for fair tax reform in Scotland, with over 60 organisations recently jointly calling on Scotland’s party leaders to work together to drive forward progress, a move also supported by Scotland’s Poverty and Inequality Commission which says “substantial reform of tax policy is required”. 


For more information and interviews, please contact: Rebecca Lozza, Oxfam Media and Communications Adviser, Scotland and Wales: / 07917738450    


Notes to Editor 

  • Figures analysed by Oxfam Scotland are contained in Scotland’s annual poverty and income inequality statistics. Note: while the data covers three year averages, the data for 2020-2023 covers two years as survey response rates were affetcted by Covid. Access them here:  
  • Read the open letter to Scotland’s party leaders on fair tax reform, backed by over 60 organisations, here:    
  • Read Scotland’s Poverty and Inequality Commission’s report ‘How better tax policy can reduce poverty and inequality: recommendations for an effective and accountable Scotland’ here