Scotland set to receive £45m tax bill for more powers as Devo-plus aims to define consequences of No vote

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  By G.A.Ponsonby
 
The cost of handing limited powers over tax to the Scottish Parliament will be borne by Scotland, it has emerged today.
 
HM Customs and Revenue has confirmed that the £45 million bill to set up the collection system will be paid by the Scottish government.  Running costs thereafter are estimated to be just over £4 million per year.

The powers, due to be devolved in 2016, are part of the Scotland Bill which was based on recommendations by the Unionist led Calman Commission.  Drafted at Westminster it was then rubber stamped by both London and Edinburgh.

The tax powers will see the Scottish block grant cut by an amount estimated to correspond to 10% of the Scottish income tax take.  The Scottish government will have to re-instate the 10% tax cut in order to recoup the shortfall.

Appearing in front of a Holyrood Committee, Edward Troup, who has responsibility for the collection of the Scottish rate of income tax at HM Revenue and Customs, said: “If there were to be a change of the Scottish rate that would incur a cost, the arrangements are quite clear any additional cost which is expressly attributable to the Scottish rate should be for the Scottish government to bear.”

Academics have claimed the new tax proposal will have a negative effect on Scotland’s economy as Westminster tax estimates for Scotland will be up to two years out of date and the Scottish Parliament will be faced with having to raise taxes even higher in order to make up for unexpected shortfalls.

It has also been pointed out that any fiscal benefits resulting from economic growth would not accrue to Scotland but would go to the UK Treasury.

The news follows publication of a ‘blueprint’ by a group campaigning for what it calls ‘Devo-plus’, which calls for even more powers to be devolved, but for Scotland to remain in the Union.

The campaign group that includes Labour, Tory and Lib Dem MSPs has set out what it has described is a blueprint for further devolution of powers should Scots decide to vote No in the 2014 independence referendum.
 
Published in conjunction with Reform Scotland Chairman Ben Thompson, the report proposes that the Scottish Parliament could raise most of its own funding by 2020.  The group, headed by former Lib Dem MSP Jeremy Purvis, is currently trying to persuade Labour, the Conservatives and the Lib Dems to sign up to an agreement well before the 2014 referendum.

The report, entitled ‘A New Union’ shows:

  • how Devo-plus can be delivered during the lifetime of the next UK Parliament;
  • what the permanent long term settlement will be for Scotland within the UK; and
  • how political agreement should be brought about in advance of the referendum vote.

The report includes specific recommendations for the delivery of the long term constitutional relationship for generations to come. They include:

  • the Westminster Parliament permanently vesting the power to legislate for non reserved matters in Scotland to the Scottish Parliament;
  • the Scottish Parliament established permanently to that it can only be dissolved if it so agrees;
  • the authority of the Scottish Parliament to raise the majority of its expenditure recognised in statute; and
  • means of adjustment to the agreement, and resolutions of dispute recognised in statute. Devo Plus gives the tools to the Scottish Parliament to deliver better public services, improved social outcomes and a stronger platform for Scotland while recognising the advantage of a strong relationship with the rest of the UK.

Responding to the publication of the report by the Devo-plus campaign, an SNP Spokesperson said:

“The inescapable fact of the matter is that despite the best intentions of the people involved in the Devo-plus group, the No parties are refusing to set out any vision of what Scotland would look like if they got their way in 2014.  Even the LibDems are refusing to back the recommendations that have been drawn up by Jeremy Purvis, one of their former MSPs.

“Without a vision that they can put to people in Scotland, it is clear that all the anti-independence parties have to offer is the dismal prospect of a Scotland where the progress that has been made by the Scottish Parliament since 1999 – such as free personal care and no tuition fees – is rolled back.

“We need the power to protect the achievements that have already been made and build on them, and only a Yes vote in 2014 for an independent Scotland will secure that opportunity.”