MSPs quiz John Swinney on lapsed Tartan Tax

JOHN Swinney is to be asked to come before parliament this week to explain why ministers allowed Holyrood's main tax-raising power to become redundant without informing MSPs.

Labour, the Lib Dems and the Conservatives have all backed plans to request an emergency statement from the Finance Secretary.

It comes after the UK government revealed last week that the SNP administration had opted not to pay a 7 million fee to administer the tax, thereby allowing it to lapse.

Hide Ad
Hide Ad

First Minister Alex Salmond claimed on Friday that the cost was prohibitive and that, with no party having expressed an interest in using the 3p varying rate, and with greater tax powers soon to be introduced, the matter was "academic".

But both his Labour predecessors as first minister, Henry McLeish and Jack McConnell, have now raised questions about why MSPs were not informed that a key power, backed by the Scottish people in a referendum in 1997, had been effectively removed without any public consultation.

• Alex Salmond hits back over 'Tartan tax' powers

Labour last night confirmed it had written to Salmond to issue a formal complaint against Finance Secretary John Swinney, claiming he had misled the parliament.

Last week, in his spending statement for 2011-12, he told MSPs that he had decided not to use the tax-varying powers in his budget, without informing MSPs that ministers had opted not to pay the administration fee.

A spokesman for Swinney last night said the finance secretary would "be happy" to answer questions later this week in parliament, with a statement expected on Thursday.

The row involves the Scottish Variable Rate, which gives MSPs the power to move income tax up or down by 3p. In 2000, the then Scottish Executive paid the UK government 12m so that HMRC could administer the tax should MSPs decide to use it. They also paid 50,000 a year annual fee.

It emerged last week that the SNP administration stopped the 50,000 payment when it came to power in 2007. Then, this summer, faced with a request to pay a further 7m to the HMRC for work on new systems to allow the tax powers to be available after the Scottish elections in 2012, they declined.

Scottish Secretary Michael Moore declared last week that, as a result, the powers were no longer available.

Hide Ad
Hide Ad

In parliament last week, Swinney told MSPs that having "explored options" to raising income, the government "will not raise the Scottish variable rate of income tax".

Labour's constitutional spokeswoman Pauline McNeill, said last night: "In his budget statement last week John Swinney misled the parliament. It was fundamentally dishonest to say the Scottish Government had explored options using the Scottish Variable Rate when this option no longer existed."

She added: "It is extraordinary that when the SNP decided to scrap it they did not tell anyone. John Swinney has had ample opportunity to do so, but chose not to."

McConnell said: "To effectively eliminate the choice that the power provides by stealth is an underhand act which shames the parliament as well as the SNP Government."

However a spokesman for Swinney said last night: "It is the opposition who are being misleading on this issue. The 3p tax power obviously continues to exist in this spending period and if opposition parties want to put income tax up in Scotland, then even if we had spent another 7m on top of the more than 12m already spent by Scotland on HMRC computer systems which clearly have serious defects, the earliest a tax rise could have been in place would be 2012/13 because of the ten-month notice period HMRC always required."

He added: "John will be very pleased to set these matters out in parliament."