Labour MP Ian Murray: Holyrood should use its new powers to cut tax

Edinburgh South MP Ian Murray made his comments at the party conference in Manchester, a day after Scottish Conservative leader Ruth Davidson called for a 1p cut in income tax using devolved powers in a growing consensus across pro-Union parties that Holyrood’s tax-cutting powers should be used.

Mr Murray said a cut in income tax would prove to Scottish voters that Holyrood had been given significant deevolved powers.

He told The Scotsman: “The Scottish Government at the moment are quite clearly saying, ‘We can’t do anything to improve the economy of Scotland because we don’t have the fiscal levers to do so.’”

Mr Murray attacked the SNP for allowing the Scottish Government’s powers to vary the rate of income tax by 3p to lapse.

But he pointed out that the Scotland Bill contained new powers that would all be in place by 2016 and could eventually be used.

He said: “They have now got stamp duty, so they could do something to help first-time buyers, which is the main driver for the construction sector.

“And they have got the ability to borrow both in capital terms minimum of £2.7 billion and revenue terms up to half a billion.”

And he argued that the borrowing powers could be used to underpin a temporary cut in income tax if the 3p variable rate was brought back.

While emphasising that it would only be a temporary cut, which might need to be paid off with an increase later, Mr Murray said it could help boost demand in the economy.

“Demand is being choked off because of austerity, the best way to get money into people’s pockets, for people who don’t have the power to do VAT, is to do it on income – and that would give the economy an immediate boost and allow people to spend more.

He said the move would help lower and middle income earners most.

“It affects much more people, particularly lower-paid people, who would have more of a boost and at a time when the economy needs a boost,” he said.