2015-06-13 06:44:09 UTC
"Another report drawn up for Scottish Labour suggested that the price of
a barrel would need to rise from its current $60 to $200 for Scotland to
Scottish Secretary David Mundell said the Scottish Government’s
reluctance to press ahead with fiscal autonomy could be explained by the
fact that the basic rate of income tax in Scotland would need to more
than double to cover the near-£10bn gap identified by the IFS."
FINANCE secretary John Swinney would have to “more than double” income
tax north of the Border to fill the financial black hole created by the
introduction of the SNP’s plans for full fiscal autonomy, the UK
government has warned.
The claim was dismissed as “ludicrous” by SNP deputy leader Stewart
Hosie but was based on a £10 billion annual funding gap identified by
the UK’s leading independent economic think tank, the Institute for
Fiscal Studies (IFS). The Scotland Office made its calculation as HMRC
released its report into identifying the number of Scottish income tax
payers for new powers set to be introduced next year, which will see the
beginning of an official Scottish rate of income tax.
The row broke out as the SNP’s 56 MPs have been publicly dared to back
an amendment by Tory grandee Sir Edward Leigh to the current Scotland
Bill on further devolution which would deliver full fiscal autonomy for
Scotland. Sir Edward’s amendment was compared by critics to one put down
by the SNP which was described as “a fudge designed to ensure that
Scotland would never get full fiscal autonomy”.
Full fiscal autonomy would mean Holyrood was responsible for all tax and
spending while it paid a supplement to Westminster for defence, foreign
affairs and servicing the national debt.
The issue looks set to be debated in the committee stage of the bill on
Monday against the background of a report by the independent Office for
Budget Responsibility (OBR) which said that oil and gas revenues will be
virtually wiped out as a significant tax take, with an expected £2bn
coming into the Exchequer between 2020/21 and 2040/41 instead of the
previous estimate of £37bn.
The OBR claimed while the expected revenues were much lower because of
the dramatic fall in the price of a barrel of oil, a rise in the price
would still leave “minimal” tax revenues because of the cost of
decommissioning former oil and gas fields.
Highlighting an admission by Mr Swinney that he could use powers already
agreed for Holyrood and due to come in next year to raise income tax, Mr
Mundell said: “The onus is now on the Scottish Government to tell us
what the new rate is going to be. John Swinney has already confirmed
that he is considering increasing tax.”
He went on: “If full fiscal autonomy were ever to happen then the basic
rate of income tax in Scotland would need to more than double to keep
spending at current levels.
“Even the First Minister now accepts that fiscal autonomy would be a
burden for Scotland to shoulder. They are demanding something they don’t
want so that they can complain when they don’t get it.”
Mr Hosie described the claims as “ludicrous”. He said: “The UK had a
deficit of around £75bn in the most recent financial year – so by his
bizarre logic, Westminster would have had to raise taxes by £75bn in a
single year to be financially viable.