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BLOG: Scottish government has the upper hand on income tax

How much influence will opposition parties have when it comes to income tax. Credit: PA

It's coming yet for a that. Not "that man to man the world o'er shall brothers be, for a that". Burns' great cry for equality may have to wait awhile yet.

I'm taking about income tax powers.

They have come to Holyrood under the latest Scotland Act and MSPs will have to vote on them soon, for a that.

With the Scottish National Party now forming a minority government, the question is how much influence on tax rates will the the opposition parties have?

Quite a lot you might have thought. But a look at the rule books shows that you - and others including some opposition MSPs I have spoken to - might have thought wrongly.

It turns out that only Scottish Ministers - a term defined in law - can propose changes to the income tax rates and bands in Scotland.

And that when they propose them all that parliament can do is to agree or reject the proposals, not amend them.

The rules are set out in a written agreement between the Scottish government and parliament's finance committee, struck in April of last year.

It says:

While the Parliament will be able to make recommendations in relation to the devolved tax proposals, proposing tax rates and thresholds will be a matter for Scottish Ministers.

The Parliament will be asked whether or not to approve the tax rates through the legislative process but will not have the opportunity to amend the rates.

While the Parliament will be able to make recommendations in relation to the Scottish Rate of Income Tax (SRIT), only Scottish Ministers may move a motion for a Scottish rate resolution. Such a motion may not be amended.

– The Parliamentary Agreement
First Minister Nicola Sturgeon at First Minister's Questions today. Credit: PA
  • If this kind of thing floats your procedural boat, you can read the agreement here

Designed to ensure that tax proposals conform to the law under which the Scottish parliament was created, this considerably strengthens the hand of the government of the day.

And makes it much more difficult for the other parties to change the tax plans of the SNP government.

  • Labour and the Liberal Democrats

Want to put a penny on income tax with much, if not all, of the money going on education.

  • The Green Party

Want to be even more radical. They propose five tax bands, with a top rate of 60% for those earning more than £150,000.

They say that most people would be better off, and more tax would be raised, but also of course those in the higher brackets would pay quite a lot more.

In the wake of the Autumn Statement at Westminster yesterday the Greens co-convenor Patrick Harvie today challenged Nicola Sturgeon to use the powers Holyrood now has to make taxes in Scotland more progressive.

The First Minister replied that her party would not pass on the increase in the higher rate allowance, which will give the better off more money in their salaries.

That's a measure which is opposed by the Tories, by the way. Ruth Davidson's party say no-one in Scotland should pay more in tax than someone in the rest of the UK.

Ms Sturgeon also claimed that the Scottish government's budget had been cut by Westminster by £2.9 billion under the Tory UK government, implying nothing Holyrood could do could make up for that.

Mr Harvie, in effect, told the First Minister that simply wasn't good enough and as good as told the First Minister to put her money where her redistributional mouth is.

Now that's very unlikely to happen. The SNP say they promised voters not to raise income tax rates and they are going to stick to that. And thanks to the rules it appears that the SNP has the upper hand in tax.

Now the Greens in particular have been adept at using parliamentary procedures to find ways to force the government's hand. So we should watch out for that.

But it will be difficult for any of the opposition parties to change the income tax plans of the government which will be put to Holyrood particularly as they disagree on what should be done.

Having said that there is one intriguing possibility. If all the opposition parties simply vote down the tax resolution proposed by ministers they could force the Scottish government to think again.

And that might, just might, give the opposition some more influence. But what the government would come back with, it is impossible to say at this stage.

When we finally know the government proposals, when they come to parliament, on December 15, we may get a clearer idea.

And hope perhaps that MSPs have this line from Burns 'Is There For Honest Poverty' in mind:

"The rank is but the guinea's stamp, The Man's the gowd for a' that."

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