Westminster's delayed budget means 'income tax may not be collected in Scotland'
Derek Mackay hit out after it emerged that UK Chancellor Sajid Javid would be setting its budget on March 11 which will include Scotland's settlement for 2020/21.
It means MSPs face a race against time to then agree Scotland's different tax rates and pass a budget before the end of March. The SNP's normal budget partners, the Greens, are already threatening the block any spending plans which don't include radical climate change proposals.
The Scottish Government would normally begin its three stage budget process with publication of Mr Mackay's spending plans in mid-December, but the Uk election saw this delayed.
Mr Mackay said today: “The UK Government gave no prior notice before announcing their budget date, showing complete disrespect for the Scottish Parliament and our budget process.
"I received no response to our repeated calls for clarity on the budget date, including the most recent letter sent to the Chancellor just two weeks ago.
“The UK Government’s approach to the Scottish budget is completely unacceptable – the delay of over four months since their original planned date cannot be blamed on the general election, and suggests a disregard for devolution and a lack of fiscal responsibility."
The UK Budget would normally be set in October or November, allowing good time for the devolved administration to assess their spending capabilities before passing their own budgets. It now means the three-stage budget process in Scotland has to be crammed a few weeks.
Mr Mackay added: “The failure of the UK Government to publish its budget at an earlier time means we do not have clarity on the funding available for our schools, hospitals and other vital public services. Despite this, we remain focused on introducing a Scottish budget for 2020-21 at the earliest practical opportunity.
“We will continue to engage with the Scottish Parliament and the Scottish Fiscal Commission over how best to respond to what are exceptional circumstances, and an announcement on the proposed date for introduction of the new Scottish Budget will be made in due course.”
And Alexander Garden, chair of the Chartered Institute of Taxation’s Scottish Technical Committee warned that it could leave MSPs struggling to get a budget passed. If MSPs cannot agree a resolution on the Scottish tax rate before March 31, it means that no income tax will be collected in Scotland.
Mr Garden said: “A UK Budget on 11 March leaves MSPs with just a few days to react to changes made at Westminster and to agree what the rates and bands of Scottish Income Tax will be ahead of the start of the new tax year in April."
He added that the prospect of MSPs fail to reach an agreement was "highly plausible in a parliament of minorities."
“There remains the chance that Derek Mackay could choose to go it alone and outline his plans before 11 March, but in this situation, he would be constrained by not knowing the true extent of Scotland’s fiscal picture," he added.
“None of these scenarios are appealing and mean we are facing a Scottish budget process that will be conducted at breakneck speed, with little room for manoeuvre."