Scottish parliament gets taxation powers

Scotland is to get limited powers to set its own income tax rates and borrow money in a new phase of devolution from London to the Scottish parliament in Edinburgh.

The measures were described by the London government as “the largest transfer of fiscal power from London since the creation of the UK.” However, supporters of Scottish independence criticised the new powers as weak and insufficient.

The proposals form the centrepiece of a new Scotland Bill drafted by the Tory/Lib Dem coalition government in London. They will allow the Scottish administration to increase or cut income tax rates by up to 50 per cent for basic rate taxpayers, and by 20 per cent at the highest rate.

The measures also go further than some expected by offering the Scottish government greater borrowing powers, and more quickly, than originally recommended by a commission on devolution.

In addition, Scotland will be allowed to introduce new taxes -- with Westminster’s approval -- and have control over stamp duty and landfill tax.

In all, the powers will give the Assembly at Edinburgh control over about 12 billion pounds -- 15 per cent of all the taxes it provides to London, or about 35 per cent of its current spending: the funds it receives from London will be cut by an equal amount.

However, the powers were criticised by Mr Salmond as “extraordinarily modest; a missed opportunity”.

Mr Salmond said Scotland needed control over all income tax at the very least, and ultimately financial autonomy, as a step to full independence. The proposals only gave Scotland control of a small fraction of its revenue, and fe said the battle over Scotland’s financial powers will dominate next May’s elections to the Scottish parliament, when the debate would be decided “on the streets of Scotland”.

He added: “I’m relishing the prospects of taking the Scotland Bill and our alternative proposals to the Scottish people; the only test which really matters is the test of popular sovereignty and popular assent.”

Mr Salmond said the powers, which will not be passed by Westminster until after May’s devolved elections, would have a deflationary effect on the Scottish economy and fail to give Scotland the freedom it needed to stimulate industry and employment. He described English ministers as “extraordinary control freaks” over their refusal to yield power over a range of minor local taxes.

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