Finance Minister John Swinney will face angry MSPs today as a storm surrounding Scottish taxes has erupted at Holyrood.
The controversy surrounds what is known as the “tartan tax”, powers to change income tax in Scotland 3 pence to the pound, and has been a part of devolution since the Scottish Parliament was voted for in 1997. MSPs have recently discovered that no structure has been put in place to use the power, which could raise £1 billion per year. Alex Salmon, First Minister, has defended the delay;
“No Scottish administration has used the 3p tax power, none of the main parties in Scotland advocate using it now”
Despite the tax not being used the power has been maintained at a price. The start-up cost was £12million and was held up until 2007 at £50,000 per year. The SNP stopped paying in 2007 when HM Revenues and Customs wanted to upgrade computer systems at the cost of £7 million.
Tavish Scott, the Liberal Democrat leader at Holyrood, has accused the government of a “cover up”, and Malcolm Chisholm, Labour MSP, has questioned the transparency of the Parliament when the finance minister continuously failed to reveal the situation early enough. Mr Swinney has said he will reflect on these issues before addressing MSPs this afternoon.
First Minister Alex Salmond has reacted to the controversy by writing to Michael Moore, the Scottish Secretary who highlighted the discrepancies, by claiming that the Scottish Government had made a request in 2007 for details on the computer changes but had only received the £7 million bill in 2010. The letter also claims that any IT changes were the responsibility of the ministry in charge and not the Scottish Government.
John Swinney will not welcome further criticism, with Professor David Bell of Stirling University having written a report stating that a freeze in council tax will not help the Scottish economy. The continued freeze, now in its fourth year, will save according to Professor Bell just 0.3% per household. Councils have also complained that the savings of £900 million will not lead to efficiencies but cuts in services.