Scotland Bill

David Amess Excerpts

Monday 29th June 2015 Commons Chamber

[Sir Edward Leigh (Gainsborough) (Con)]

I beg to move amendment 124, page 14, line 14 , at end insert—

‘( ) The Scottish Parliament may determine the level of each threshold of income at which a Scottish taxpayer becomes liable for income tax at any of the rates set by the Scottish Parliament;”

This amendment allows the Scottish Parliament to decide at what threshold of income Scottish taxpayers should have to pay the basic rate or any of the other income tax rates to be set by the Scottish Parliament.

[The Temporary Chair (Sir David Amess)]

With this it will be convenient to discuss the following:

Clauses 12 to 14 stand part.

New clause 32—Treasury Review of the implementation of Scottish rates of income tax—

‘(1) The Treasury shall, no later than one year after the date on which this Act is passed, publish and lay before the House of Commons a review of the implementation of the Scottish basic rate and any other income tax rates for the purposes of section 11A of the Income Tax Act 2007.

(2) The Treasury review must include—

(a) a review of the revised fiscal framework;

(b) the tax year to which sections 12 and 13 of this Act will apply, and the day on which they are due to come into force;

(c) the number of staff assigned by the Scottish Government, Revenues Scotland and Her Majesty’s Revenue and Customs, to the project implementing the Scottish basic rate, and any other rates;

(d) a report on the identification of Scottish taxpayers who will be liable to pay the Scottish basic rate, and other rates;

(e) the rates and bands at which the Scottish basic rate, and any other rates, have been set by the Scottish Parliament; and

(f) a projection of the impact of the Scottish basic rate, and any other rates, on income tax revenues generated in Scotland and across the UK.’

This New Clause would provide for a review of the progress in implementing the new Scottish rate of income tax. This will include a review of the revised fiscal framework, a task that will hereafter be undertaken by the Scottish Office for Budget Responsibility.

New clause 54—Taxes on income—

‘In Section A1 in Part 2 of Schedule 5 (fiscal, economic and monetary policy) to the 1998 Act, in the Exceptions, after the entry for local taxes insert “Taxes on income.”’

This new clause is intended to devolve income tax completely to Scotland.

[Sir Edward Leigh]

My simple amendment would allow the Scottish Parliament to set tax thresholds, as any good Parliament should be able to do, and is a genuine attempt to elicit from a Minister the reasons why the Scottish Parliament is not currently allowed to set the personal allowance. I am a lawyer, but I do not claim to be a tax expert or an economist. [Interruption.] Well, it’s just the truth. I am not an expert tax lawyer or economist. This is a probing amendment to help us investigate a complex issue, to which we can always return on Report.

The House of Commons Library has illustrated the complexity of the issue:

“The Bill as it stands would allow the Scottish Parliament to set the bands of income at which different Scottish rates of tax would apply. Clause 12(3) states that where there is to be more than one Scottish rate, the resolution which sets these rates ‘must also set limits or make other provision to enable it to be ascertained…which rates apply in relation to a Scottish taxpayer.’”

That is not immediately terribly clear, but it continues:

“So, if the Scottish Parliament wished to, it could set a zero rate of tax over a specific band of income, in effect increasing the personal tax allowance to all Scottish taxpayers.”

Importantly, in its briefing on the Smith commission, the Institute for Fiscal Studies asked why the power to set the allowance was to be reserved. That is the question I am asking. The IFS, a reputable body, has asked it, and I am simply using the amendment to ask it again. I think most people would agree that setting tax and then spending the money raised is a prerequisite of a responsible Parliament.

It is not necessary to go over all the arguments I used on Second Reading or in Committee two weeks ago—they are on record—but suffice it to say that power breeds responsibility. The Scottish Parliament must take responsibility for its own destiny in the firm conviction that it is ready and able to do so. So why are we devolving bands and rates, but not thresholds? Is not setting the threshold at which people start to pay tax—the personal allowance—vital to the decision-making process? Setting a band or rate but not a threshold is like being willing and able to leap the bar in high jump without having any control over where the height is calculated from. It does not make any sense. What we are giving the Scottish Parliament is only half a power. Are not thresholds much the most interesting part of the equation? We spent a lot of time last Parliament debating that point in relation to the UK economy.