Draft Scottish Rate of Income Tax (Consequential amendments) Order 2015

Debate between Douglas Chapman and David Gauke

Wednesday 16th September 2015 General Committees

[Mr Gauke]

On the process for pension funds, we are mindful of the specific challenges. The hon. Lady asks for the cost of administration for pension providers, but we do not have a specific number. We are happy to confirm that HMRC continues to work extremely closely with the pensions industry and is extremely mindful of minimising the burden. There are technical groups involving the industry, which continue. End-of-year adjustments for pension taxation often occur for changes of circumstances in-year. Any required adjustment that relates to the interim treatment of Scottish taxpayers will occur in the same manner, usually through coding adjustments.

To finish the point I was making on guidance being published to identify taxpayers, which the hon. Lady raised, HMRC received 20 responses to its consultation on the guidance and is amending it to reflect that. Final technical guidance and supporting information for taxpayers will be published later this year.

Picking up on the point that the hon. Member for Midlothian made about the powers being devolved to Scotland, the Smith commission—it is important to remember that all parties present in the Scottish Parliament signed up to it—specifically decided after careful consideration not to devolve income tax fully but to leave it as a shared UK tax, albeit with significant powers to set rates and thresholds being made available to the Scottish Parliament. That is why the whole of income tax has not been devolved. The UK Government will continue to set the personal allowance, other allowances, income tax on savings and dividend income, and reliefs. Going further than the powers set out in the Scotland Bill would break the concept of a shared tax and would be complicated for individuals and employers with activity on both sides of the border, who would have to understand and comply with two potentially entirely different systems.

As the Prime Minister pointed out today, we can keep on debating the processes, but very substantial powers have been devolved to the Scottish Government and the Scottish Parliament. Perhaps debate should now focus on how those powers are used rather than necessarily continuing to be about which additional powers should be provided, given where we got to with the Smith commission.

[Douglas Chapman (Dunfermline and West Fife) (SNP)]

Although I recognise that more powers are coming our way through the Scotland Bill, does the Minister agree that there has been grudging movement in the pace of change on the income tax powers? These are matters that affect Scotland’s future financial wellbeing, and I think the powers that we are discussing today were first raised in the Calman commission in 2009. They will not be implemented until the Scottish Government bring forward a Budget in 2016-17, and it is unlikely that full powers will be in place until 2019. The hon. Member for Worsley and Eccles South mentioned pension arrangements. At this pace of change, I will probably be collecting my pension by the time some of these changes are implemented.

[Mr Gauke]

I do not accept that point. In the course of a year, the establishment of the Smith commission and the bringing forward of legislation to devolve income tax much more fully to Scotland has been remarkably fast-paced. Indeed, the point that the hon. Member for Worsley and Eccles South raised was that it involves, in some cases, really quite complicated changes. Institutions such as insurance companies need to be able to make changes to ensure that it works effectively. Yes, there are times when we need a run-in period to introduce measures, but in reaching a consensus and making progress towards a very substantial transfer of power, I am pleased to say that the Government are delivering on the promises made before the Scottish referendum.