'Retreat' on new Scots tax powers

TWO tax powers that were destined to be handed to MSPs will not appear in ground-breaking new laws designed to create a stronger Scottish Parliament, Scotland on Sunday can reveal.

• Michael Moore: 'bill will empower Scots'

David Cameron will this week put his name to a new Scotland Bill, the biggest reform of Holyrood's powers since devolution, which will see Westminster and Holyrood sharing responsibility for raising income tax.

Other powers, including the ability to change the speed limit and outlaw air guns, are also set to be devolved to Edinburgh.

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However, the "basket" of taxes that UK ministers are handing to their Scottish counterparts will miss some of the elements recommended by the Calman Commission, on which the new legislation is based.

This prompted claims from the SNP last night that the legislation, to be published symbolically on St Andrew's Day, this Tuesday, will end up being "Calman minus".

A spokesman for First Minister Alex Salmond said: "The smaller taxes retreat is another indication that the Tories are going to deliver 'Calman Minus' – an embarrassment to the beleaguered Lib Dems in Scotland, whose leader Tavish Scott boasted of 'Calman Plus'."

Air Passenger Duty – which charges airlines for each passenger they carry – will remain at Westminster. The Aggregates Levy, a tax on quarrying, will not go to the Scottish Parliament either. Combined, they are worth 150 million a year to Scotland.

Last night, the Nationalists were coming under pressure from Labour, the Lib Dems and the Tories to get behind the new Bill, saying it will create a more accountable and better functioning democracy in Scotland.

Scottish Secretary Michael Moore said the bill would close the "accountability gap" at Holyrood where MSPs have, for ten years, had responsibility for spending their near 30bn budget, but only marginal control on tax.

He said: "The Scotland Bill will empower the Scottish Parliament and see Holyrood answer to the public for the decisions it makes on raising revenue. That brings far more transparency, clarity and accountability to the Scottish Parliament and is to be welcomed.

"It bridges a gap in accountability, and is a major step forward in improving devolution and bringing it closer to the people of Scotland."

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The three opposition parties in Scotland are now calling on the SNP to provide parliamentary time for the bill. For the first time, a Westminster bill will be debated initially at Holyrood, giving MSPs the power to pass it before MPs.

In a joint statement, the leaders of the three parties, Iain Gray, Annabel Goldie and Tavish Scott, said: "In the general election in May, the parties who reject independence but want to improve the devolution settlement won 80 per cent of the vote. The UK government has responded and will publish a new Scotland Bill on St Andrew's Day. Now it is the turn of the SNP Scottish Government to respond in kind.

"We expect them to make time for an early debate on the bill, and to prepare the necessary legislative consent motion. If they won't, we will."

The scene is now set for a major political row, with the Nationalists claiming the plans are half-baked and could damage the Scottish economy. Figures produced by the SNP Government claim that, had they been reliant on income tax receipts last year, they would have lost 900m in revenue, thanks to the recession.

Moore, however, is expected to publish a "Command paper" this week which, sources say, will answer questions about the technical flaws in the Calman plans. As well as income tax, the Scotland Bill will propose devolving Stamp Duty, giving MSPs the power to lower or raise the tax on buying a house in Scotland.

But the tax powers are less ambitious than initially proposed. The Air Passenger Duty is not being devolved because the coalition government plans to replace it with a levy that taxes planes rather than passengers. The Aggregates Levy will stay at Westminster because the EU wants a continent-wide levy in place. The Aggregates Levy is worth 50m a year to Scotland and the Air Passenger Duty 100m.

The SNP spokesman said plans to devolve income tax were a "Tory trap". Of the financial reforms, he added: "They will not only fall far short of what Scotland needs, but will short-change Scotland. If the Calman financial proposals had been in place in this spending period, Scotland's budget would have been 900m less in 2009/10 than it was.

"Scotland needs full economic powers and financial responsibility so that we can protect jobs and public services by growing the economy. "