Scottish Labour would use devolved powers to raise income tax while ensuring compensation for low paid workers, Kezia Dugdale will reveal today.

In a major speech in Edinburgh this morning, the Scottish Labour leader will set out a clear position to the left of the SNP, by pledging to increase the Scottish rate of income tax to 11p – 1p higher than that proposed by George Osborne and John Swinney. Given the powers mean that income tax rates at each level have to be raised in the same manner, Dugdale will also announce a payment scheme that will boost the salaries of those earning under £20,000 by £100.

The tax rise would raise £500 million to invest in services, primarily the education system, which currently faces cuts of £130 million under the SNP. Education has become a focal point of Scottish Labour’s election campaign.

The boost to low-paid workers’ incomes will cost just a tenth of that total raised by the changes.

Dugdale plans to say:

“The cuts the SNP have decided to inflict will be felt in every community in Scotland. The hundreds of millions of pounds taken from local services are cuts to things that we all rely on.

“But the worst thing about the SNP’s choice is that they will make cuts to education.

“On top of the £130 million of cuts announced to the Scottish Government’s centrally managed education budget, the hundreds of millions of pounds of cuts to local government will mean a new round of cuts to our children’s nurseries, primary schools and secondary schools.

“In the past, as local government has been cut again and again, we have been promised that education is protected. The official figures show that isn’t true.”

She will add: “Education is already falling behind. Further cuts to schools will only make it harder to catch up. These cuts will disadvantage children, hold back business and harm our economy.

“Labour cannot support an SNP budget which asks our children and young people to bear the brunt of the cuts.”

She will also tear into the SNP’s current plans, which mean not using Scotland’s tax powers to limit the level of public sector funding cuts made.

“We will tear up this SNP budget that simply manages Tory cuts and instead use the power we have to set the Scottish rate of income tax one pence higher than the rate set by George Osborne. This will provide an extra half a billion pounds a year to invest in the future.

“We don’t do this because we want to use the powers for their own sake. We do it because there is no other alternative to cutting into our nation’s future.”