Limited tax powers for Scotland

Submitted by Matthew on 3 December, 2014 - 11:06 Author: Dale Street

The cross-party Smith Commission on further Scottish devolution — set up following the “No” vote in September’s Scottish referendum — published its report last week.

The Scottish Parliament will have the power to set its own income tax rates and the income levels at which these are paid. Around half of VAT receipts will be allocated to the Scottish government’s budget. Control over Air Passenger Duty will be devolved to the Scottish Parliament.

Although the Smith Commission proposes that the Barnett Formula (used to calculate the block grant paid to Scotland by the UK government) will continue, it also proposes “an updated fiscal framework.”

In effect, this means that the greater the income raised by the Scottish Parliament (e.g. from income tax, or from VAT receipts), the less it will receive as a block grant.

The Scottish Parliament will have increased borrowing powers and control over local and Scottish elections (including extending the franchise to 16/17-year-olds), albeit only if approved by a two-thirds majority in Holyrood.

The National Minimum Wage and all elements of state pensions remain under Westminster control, as too does Universal Credit (UC). But the Scottish Parliament will have powers to: tinker around the edges of UC; control some non-UC benefits; and create new benefits in areas of devolved responsibility.

For supporters of independence, the Commission’s proposals are inadequate. For opponents of independence the Commission’s proposals are “a promise delivered”.

It is certainly true that some of the central demands raised in trade union submissions to the Commission have been ignored: employment law (including anti-union laws); powers to take industries into public ownership; all welfare benefits (including UC); Employment Tribunals (including fees); and the HSE.

Sunday’s Scottish press carried reports that an earlier draft of the Commission’s report included proposals for devolution of effectively the entire welfare benefits system to Scotland, including UC.

The Commission’s proposals provide a focus for continued agitation for independence.

Their inadequacies, runs the argument, mean that only independence can meet Scotland’s needs, despite the clear majority against independence in the referendum held just two and a half months ago.

This results in a political “discourse” in which all social and economic problems are portrayed as the result of “Westminster rule”, while Holyrood and the SNP, supposedly lacking “real” powers, are beyond criticism.

While the pro-independence left transforms itself from being class-struggle activists into latter-day Scottish Walter Bagehots, the actual agency of social change — the working class — is sidelined by this “discourse”.

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