Alex Salmond hits back over 'Tartan tax' powers

First Minister Alex Salmond has defended his government's decision not to renew tax-varying powers at Holyrood, saying that it could have cost "tens of millions" of pounds to introduce.

• Salmond said the change in system was 'curious'. Picture : Robert Perry

The Scottish government has been criticised after it was confirmed by Scottish Secretary Michael Moore earlier this week that the power to raise tax in Scotland, previously held by devolved administrations, had been lost for the next three years.

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The arrangement had allowed Scottish ministers to raise - or lower - income tax by up to 3p in the pound, but was "allowed to lapse" in 2007, Mr Moore said.

MSPs are set to quiz finance secretary John Swinney on the issue next week, with Labour writing to Mr Salmond to make an official complaint against Mr Swinney.

Both of Mr Salmond's Labour predecessors as First Minister - Jack McConnell and Henry McLeish - have questioned why MSPs were not informed of the decision not to renew the power.

But Mr Salmond said in an interview that new tax powers proposed by Westminster could cost "tens of millions" of pounds to implement in Scotland.

"The facts are that four months ago the HMRC presented us with a demand and said if we paid them 7 million to finance their new system", he said. "Their new computer system, then in two years' time that would enable them to have the opportunity to use the tax varying power. We offered talks, we've heard nothing since, up until this week.

"It seemed curious for a number of reasons. This was the first mention of a 7 million payment. Why should we be paying for something that was paid for 10 years' ago given that the Inland Revenue made the decision to introduce a new tax system?"

Mr Salmond said the previous contract ended in 2007 and that the new computer system caused the current problem.

He continued: "It seemed several months ago that this was an academic thing because there's about to be legislation to introduce a replacement tax power and the assumption that everybody was working on is that at the most it would take a couple of years to be implemented so why were they talking about a bill for the previous power.

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"I think we now have to ask the question: what is the bill for the next power going to be? Is it going to be 7 million or 12 million or, as I suspect, many tens of millions, which is what this is really about, and how long is it going to take to implement that power if the Con Dem Government goes ahead with their version of Calman? I think that's really what this sudden bill is about."

Mr Salmond also dnied Finance Secretary John Swinney's statement earlier in the week about taxes was misleading, saying ruling out raising the variable rate had "always been our position".

He said: "John was stating what is true - that we don't have proposals to raise taxation in Scotland because we think it would be the wrong thing to do.

"Our proposal is to have Scotland to have the economic powers to enable us to grow our economy out of the Westminster cuts."