Calman\’s Holyrood tax power plans \’don\’t go far enough\’- The Scotsman

David Maddox, The Scotsman, 12 June 2009                              

Plans to give Holyrood greater tax raising powers do not go far enough, a leading think-tank has claimed.
Reform Scotland was reacting to revelations in The Scotsman yesterday that the Calman Commission will propose the Scottish Government has far greater control over income tax.

But the members of the centre right think-tank headed by former Conservative candidate Geoff Mawdsley and banker Ben Thomson had wanted the commission to go much further.

The Calman Commission, set up last year by the pro-Union parties to look at how to improve devolution in competition to the SNP\’s National Conversation, is set to propose that Holyrood should be given control of income tax beyond a 10p basic rate for the UK and 30p and 40p at the two higher rates.

This would give MSPs the power to raise or lower income tax as much as they liked.

However, critics believe that the new power would go largely unused because MSPs would not want to risk losing money by cutting tax or making Scotland the highest taxed part of the UK.

The current "tartan tax powers" of varying Scottish income by 3p up or down have gone unused in the first ten years of devolution.

In its submission to the commission chaired by Sir Kenneth Calman, the Chancellor of Glasgow University, Reform Scotland had called for Holyrood to be made more accountable by giving it the ability to raise and lower major taxes.

The think-tank also called for Scotland to have its own Treasury in a solution similar to the "devolution max" proposals put forward by the Liberal Democrats.

In The Scotsman yesterday, Isobel d\’Inverno – of legal firm Brodie\’s – who had represented Reform Scotland in evidence to the commission, dismissed suggestions that European law prevented this from happening.

She said case law with Portugal and the Azores showed a devolved region could have its own tax powers if there was a proper change to the constitution.

However, Mr Thomson, chairman of Reform Scotland, conceded that, despite his disappointment, the proposals revealed in The Scotsman represented "a real step forward".

But he added: "Our view is the Scottish Parliament needs to have much greater power to raise its own revenue in order to enhance its financial autonomy and accountability.

"This is vital to provide a real incentive to introduce policies which encourage economic growth and provide real value for money while giving the Scottish Parliament the fiscal tools which they could use to increase economic growth."

He said that instead of just under half of income tax raised in Scotland being the responsibility of Holyrood as suggested by the Calman Commission, a much greater proportion – nearer 60 per cent – would provide better accountability.

This figure was based on the proportion of devolved and reserved expenditure in Scotland.

Mr Thomson added: "The proposals do not go as far as we recommended in our report, Fiscal Powers, in which we called for the Scottish Government and parliament to be given control over a range of taxes so that they were responsible for raising all the money they spend in Scotland."

Sources on the commission have said that they wanted to provide more accountability but not undermine Scotland\’s financial stability.