Fiona Hyslop: Scotland Bill as it stands is turning into a Tory tax trap

Published on Monday 20 December 2010 21:25

As the UK government's Scotland Bill is scrutinised at Holyrood, it is becoming increasingly clear that Scotland needs access to all sources of revenue generated by the Scottish economy and people – access that independence would provide.

We do not need a high- tax Scotland. We need a high-growth Scotland which delivers quality public services for the Scottish people.

The Scotland Bill on the table does not even provide economic levers that could improve devolution. Eighty-five per cent of Scottish revenues would continue to be controlled by Westminster – that is why the Bill needs to be improved.

Around us, in plans to turn the north-east of England into a renewables hub, in Belfast's attempts to slash corporation tax and in ambitions for tax powers in Wales, the need for Scotland to remain competitive is clear.

As it stands, the UK government's Bill actively threatens Scotland's economy and public services. If its financial measures had been in place since 1999, Scotland would have lost out to the tune of 8 billion. Its focus is income tax, which has grown at a slower rate than public expenditure over the past ten years.

Replacing public spending with only a share of income tax sells Scotland short. That is why this Bill is turning into a Tory tax trap.

If implemented as it stands, people in Scotland could suffer higher income tax rates, just to keep the budget stationary. This does nothing for Scotland's economic recovery, economic growth or public services.

The December 2010 Scottish Social Attitudes Survey showed that 62 per cent of Scots support significant extra powers for Holyrood. We need the right extra powers to secure economic growth.

The UK government sees this as a political Bill to create another funding formula. It must be turned into a Bill for economic growth and financial responsibility for Scotland. l Fiona Hyslop is minister for external affairs and is due to give evidence to the Scotland Bill committee today