Wednesday, 24 November 2010

Scotland's Tax Raising/Lowering Powers

The Unionists are having a ball here in Scotland accusing the SNP government of  'lapsing' the tax raising powers which were included in the 1999 devolution referendum.

I've been accused of staying silent on the matter, although I received an apology because the title of my post didn't refer to it. It's not the first time I've been pilloried by Scottish bloggers who don't take the trouble to read through my posts but prefer to read the title and, perhaps, the first paragraph but I do appreciate this one had the courtesy to apologise.

This is unionist electioneering at its best,  accusing the nationalist government for 'betraying' the Scottish people.  What utter nonsense and they know it.

Had the Scottish people have been informed that the cost of having 3p varying tax raising powers would have stretched into millions then I'm sure they would have decided against it.  For the referendum most thought that a Yes Yes vote would ensure that we secured our own Parliament.  That's what was most important and the second question regarding tax raising powers was more or less irrelevant.  To ensnare any Scottish government into a £12 million down payment for this political absurd idea in 1999, followed by £50,000 per year until 2007 when the contract terminated is an atrocity on behalf of those who designed the Scotland Act.

The tax raising powers haven't lapsed.  The legislation is enshrined in the Scotland Act 1998 Part V and therefore still available until Parliament vote for it to be deleted.  Therefore the SNP government have not 'given away' any powers, they have decided not to pay the UK treasury for something which we all know will never be used.

Should the SNP government have informed Parliament of their decision?  It would appear they wrote to the UK government in the summer asking the reasons why the HMRC were requesting £7 million to keep the legislation alive and they've had no response.

John Swinney is to face the Finance Committee tomorrow.  My thought is that he won't be signing a cheque made out to HMRC for £7 million just to keep a system alive, when the UK government intend to introduce new legislation within a matter of weeks, but I have no doubt he will show the Unionists and the Greens are purely electioneering and he won't be apologising for not informing Parliament either as the issue is still ongoing with the Westminster parliament.  That's politics.


JRB said...

Can someone please help me here …

I was never the best at mental arithmetic, and common sense occasionally passes me by, and this (non) issue has me truly confused –

- The tax raising powers only allow the Scottish Parliament to increase tax by a maximum of 3p
- If we assume there are 6million taxable souls then the Scottish Government could expect to raise 6,000,000 x 3p = £180,000
- But, Westminster would charge us in excess of £12million for the privilege of raising that £180,000

This issue is a ‘no-brainer’, in fact I would have been less than polite with Westminster and told them to stick their tax raising powers where the sun doesn’t shine, any other option is just plain daft.

... or am I missing something?

William said...

JRB, I would assume it would be 3p in the £.

RMcGeddon said...


Thank goodness you're 'retired'. I dread to think what you would have done with my prescription ;)

The SNP seem to have given the Labour toadies on BBC Scotland an open goal with this one SR. Why didn't they just explain it all in the open ? Ask other MSPs' if they wanted to pay HMRC the £7m. Bearing in mind the Act was in law and we could pay HMRC in the future instead. Once the new regulations were sorted out.
I can't feel sorry for the SNP though. Whenever one of them appears on tv I see useless windmills covering Scotland as they chase after the global warming scam.

Oldrightie said...

Scotland gain Independence, adopt the Euro and appoint Brian Cowen to run the economy. Eire leave the Euro, adopts the pound and recover!

RMcGeddon said...


Sorry I was a bit flippant there.
To answer your question.
Only income tax payers would be affected. Not the whole population.
About a million people.
The maximum tax at the moment is 40% I think. The Scottish concession would let this rise to 43% so would raise quite a lot of money.
It could of course be lowered by 3% aswell.

subrosa said...

Afternoon John. I did write a reply to you earlier but it seems to have vanished into the either.

Someone with a pre-tax net income of £10,000 would find they paid £300 more tax a year if the maximum of 3p was introduced.

subrosa said...

They've given the unionists a bit of ammo RM but the law hasn't been changed. The legislation is still in place and can be, according to Alex Neil, in operation in 10 months on payment of the £7 million.

Aye that's a thorn in my flesh too especially now the scam is unravelling yet our politicians keep promoting it.

subrosa said...

Mmm OR, is that your crystal ball at work again?

voterinscotland said...

Did you mean to type...

'This is unionist electioneering at its worst'

As someone said to me yesterday, 'at least with the SNP you won't have to pay extra tax - but with Labour.............'

William said...

Isn't it simply the case that the SNP don't like the idea of being unpopular? Raising the income tax rate would hurt them in the polls so they won't do it and will instead blame someone else.

All political parties, especially those in power, like spending public money so we can drop the pretence that the cost of raising the tax is an obstacle for the SNP, I think.

subrosa said...

Auch William. Are you saying unionist parties would raise tax?

We shouldn't even consider tax until we're fully in control of our own finances.

Dramfineday said...

Interesting question is why did this surface now? There are others such as who is behind it providing the munitions and why the SNP didn't put up an amber light in 2007 (but I suppose that'll depend on what they were told / fed by the civil service).

As for the issue, well it's my money and I give quite enough of in the form of tax to sundry political wasters. Saving a little of it, given that the hand will be oot again come Calman (thank you you political tosspots for this ill thought through mess) has to be a good thing.

Anon said...

Very well explained. Thank you.

- Aangirfan

subrosa said...

Auch you're too kind Aangirfan, but it is all about posturing and the public aren't interested.

Crinkly & Ragged Arsed Philosophers said...

This hullabaloo over a nonsense illustrates precisely why devolution is no solution to Scotland's ills.

Without the correct figures on the actual tax take from Scotland and any possible dubiety due to employees in Scotland of English based firms - to give just one example - no revenue to cost ratio can be established.

The other issue is; who exactly governs? Is it the Westminster Parliament or the Revenue and Customs? Why should there be a charge associated with the administration of an Act of Parliament. When Westminster fiddles the annual budget does it get a bill for the administration of it?

Perhaps Swinney should test this by, instead of adding or subtracting 3p on the rate, add or subtract the same from the tax free allowance.

Presently £6475.00 = £194.25 + or - ?

Westminster will of course implode and their minions in Scotland whimper in chorus but, if its cat skinning your after, the knife you use is of little importance.

subrosa said...

John Swinney said the power wasn't operable when he took over in 2007. Surely the last coalition ought to be called to explain.

Such a pity John didn't say anything then. He could show up the unionists for what they are. Hypocrits.

Apogee said...

Hi SR. Could be I got this totally wrong, but from one article a while back, I got the impression that for every pound raised by increasing the tax, the money from London would be reduced by the same amount?

subrosa said...

No Apogee, that's correct. I should have included that in the post. My omission and thanks for bringing it to my attention.

Apogee said...

Hi SR. So I am wondering what the labouring party and others are getting so het up about a tax 'raising' power which has and would achieve nothing but to take money out of Scots pockets and hand it to Westmidden, they really do take us for fools.

subrosa said...

I've had a look through the Scotland Act Apogee and the money would be put into the Scottish Consolidate Fund. There's so much jargon that it's difficult to assess whether the Scottish grant would be reduced by that amount.

Crinkly & Ragged Arsed Philosophers said...

SR, if I could answer Apogee's question it would be along these lines.

If Scotland were independent it would have to devise and set its own tax regimes. That's a given and, even if it followed the Westminster model and rates to a great or lesser extent is an irrelevance. The real issue is it would be able to spend the revenue on the values Scotland wants, not those imposed by Westminster. Devolution doesn't allow that. Instead it creates a fog of fudge which has no other purpose than to maintain its sovereignty. Pocket money we can have but what we can spend it on is restricted - that's devolution.

Under the present Scottish governments term we have now two instances when Westminster has blocked progressive tax schemes. The first was in the proposed introduction of LIT. When HMRC made it known, or claimed, it would be difficult , if not impossible to collect. Question, why should it be any more diffecult to collecting any other tax? Now we have the same HMRC disclosing a charge that was made and implying further costs have to be paid for a variation in tax that has never been implimented? Ask yourself, why has this been raised at this time? Does it serve a purpose other than political posturing?

Finally, why is the management and distribution of tax perhaps more important to the contentment and well being of a society than the amount that has to be paid. Empathy has a lot to do with it. The feeling that your money is being spent wisely on causes who's values you can empathise with.

The other major factor which is related to empathy, is that your not being cheated; you're getting your share equitably and that share is not being depleted by cooked books and snake-oil chefs.

It's my belief that the Scots as a tribe have a tad more social equity inbuilt in their genes through inherited history than our cousins down south. Which could go some way to explaining the hold Labour have (now so undeserving) in Scotland and why Conservatives have never gained the popular vote.

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