If it’s Wednesday, Labour must have changed their position on their future-devolution proposals again. Following our latest highlighting of the glaring contradictions in the shambolic “Devo Nano” plans, responses have started arriving to your letters.
If you’ve been listening closely, you’ll have heard that the position on whether the Scottish Parliament would be able to reduce taxes below the UK level has see-sawed from “No you can’t” (Johann Lamont MSP, 18 March) to “Yes you can” (Richard Baker MSP, 28 March) and back to “No you can’t” again (Tom Clarke MP, 4 April).
Well, guess what?
As your request for further information regarding Scottish Labour’s Devolution Tax indicates identical concerns, we are coping [sic] you all into the same reply.
The Scottish Labour Party issued a briefing paper to its MSPs and others and I copy a section of this for your information which, I hope, will answer your questions.
Income tax Q&A
- Will we be able to increase the income tax rates in Scotland?
Yes – there are two ways this can be done: (i) income tax can be raised across all bands (basic rate, higher rate and additional rate) as is the case under Calman; (ii) income tax rates can be raised in higher or additional rates – for example, it would be possible for the Scottish Parliament to reverse the cut in additional rate from 50p to 45p.
- Will we be able to increase the income tax rates higher than that of the UK rates?
Yes – see above.
- Will we be able to change the amount we increase income tax differently for basic, higher and the additional rates or do we have to increase them all by the same amount?
It will be possible to increase higher and additional rate separately. If the SP wishes to increase basic rate, it must also raise higher and additional rates.
- Will we be able to lower income tax rates?
Yes – but this will have to be done across all bands à la Calman. This means that if the SP wants to decrease any rate below the UK rate it must do so across all bands.
- Will we be able to lower the amount of income tax by different amounts for the basic, higher and additional rates or do we have to lower them by the same amount?
No – we must decrease by the same percentage across bands.
- Will be able to lower the rates of income tax below that of the UK Government?
Yes – but this needs to be done across all bands by the same amount.
- What percentage of the basic rate could the Scottish Parliament control?
75 per cent – this is because the Scottish Parliament is responsible for 15p out of 20p.
- What percentage of higher rate could the Scottish Parliament control?
37.5 per cent – this is because the Scottish Parliament is responsible for 15p out of 40p.
- What percentage of additional rate could the Scottish Parliament control?
33.3 per cent – this is because the Scottish Parliament is responsible for 15p out of 45p.
- What powers will the UK Government still retain over income tax?
The UK Government remains responsible for (i) the structure of income tax – bands and thresholds; (ii) income tax paid on savings and dividends; and (iii) rates out-with the 15p Scottish rate – so, for example, 5p of basic rate.
Rhoda Grant MSP David Stewart MSP
Highlands and Islands Regional MSP
Now, the reply above only actually addresses one of the three questions the letter asked. There’s no answer to whether there’s an upper limit on how much Holyrood could increase taxes by, and no response on whether a Labour Scottish Government’s policy would be to simply mirror the tax rates set by a Labour UK government.
It also doesn’t actually make a lot of sense in its own right. Saying “What percentage of the basic rate could the Scottish Parliament control? 75 per cent – this is because the Scottish Parliament is responsible for 15p out of 20p” only works as long as the rate stays the same as it is now, because if the Scottish Government raised the basic rate to 25p, it would then be responsible for 80% of the total, not 75.
Questions 3, 4 and 5 also seem to contradict Question 1. Clearly, if we’re to take the proposals at face value, it WOULD be possible to effectively “lower the amount of income tax by different amounts for the basic, higher and additional rates” (even though the letter says it wouldn’t), because Holyrood could – for example – cut all rates by 5p but then immediately put just the higher rates back up by 5p, creating a de facto 5p cut for the basic rate only.
So it seems the plans are still an incoherent mess which Labour’s elected representatives can’t or won’t definitively explain. As a last resort, then, we thought we’d get a popular celebrity (and a friend) in to try to take us through it – in song!
We fear that may be as clear as it gets for Devo Nano, readers.