Scots tax powers could help reduce ‘talent exodus’

The Smith Commission said the Scottish Parliament should have control over income tax rates and bands. Picture: TSPL

The Smith Commission said the Scottish Parliament should have control over income tax rates and bands. Picture: TSPL

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NEW powers over income tax could be used “imaginatively” to persuade young people to stay in Scotland, Holyrood’s finance committee was told today.

The Smith Commission on further devolution said the Scottish Parliament should have control over income tax rates and bands, when it published its findings last month.

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Holyrood’s finance committee was told that there was potential for this power to be used to retain talent and address the “brain drain” to places such as London.

Committee convener Ken Gibson - a SNP MSP - said Scotland has been losing about 30,000-40,000 people in the 20-30 age group every year in the last decade.

Scots income tax transfer ‘runs into difficulties’

Isobel d’Inverno, convener of the Tax Law Committee at the Law Society of Scotland, giving evidence to the committee on further fiscal devolution, said that the use of varying levels of income tax for different age groups could be explored.

She said: “Presumably the power to set income tax rates could be used to try and persuade people to remain in Scotland.

“I don’t know whether the Smith proposals would allow for different rates of tax to be payable by younger people compared to older people. I don’t know if that’s even possible.

“But there is also quite a wide flexibility, one would have thought, in setting the rates, and having very low rates at lower levels, even though the personal allowance isn’t to be devolved.

“You would think that the income tax powers could be used imaginatively to try and reverse the brain drain.”

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