Lib Dems call for 2p tax cut in Scotland

HOLYROOD should use its power to change the rate of income tax to give families a £330 rebate to help cope with soaring bills, the new leader of the Scottish Liberal Democrats said yesterday.

Tavish Scott called for rival parties in the Scottish Parliament to back his proposal for an emergency 2p cut in the basic rate of income tax.

This would come on top of a promise from the UK Lib-Dems to trim the equivalent of 4p off income tax for low and middle-income households through a mixture of cuts and changes to the thresholds at which tax is paid.

But Mr Scott's proposal caused a degree of confusion when Vince Cable, the Lib-Dem shadow chancellor, admitted he was unsure how it would operate as he had been in India and had not had a chance to check the fine print.

Mr Cable also warned that the 2p cut would have to be funded by Holyrood and not Westminster as he did not want English taxpayers to subsidise the Scots. Mr Cable said: "They would only be able to cut taxes in Scotland if they found cuts in public expenditure."

Mr Scott, in his first speech as Scottish leader to the party's national conference in Bournemouth, said the economy was in "meltdown" and "people are hurting now". He said: "We should use the Scottish Parliament's power to cut income tax by 2p in the pound, saving the average Scot more than 300 a year, putting money back in the pockets of people who need it most."

He later explained that around 800 million of savings from the Scottish Government's 30 billion would have to be found to pay for the tax cut. He vowed to protect money for schools and hospitals.

Target areas include "SNP quangos" such as the Futures Trust, which is the Nationalist alternative to PFI funding schemes, its skills quango and a 14 billion infrastructure investment plan. The remainder would come from Scotland's share of unexpected extra spending by the Westminster government in England, as allocated under the Barnett formula.

Mr Scott admitted that with only 16 Lib-Dem MSPs out of 129, he would be unable to drive through the change without the support of other parties.

His aim is to have the rebate become part of the Holyrood budget that the SNP will publish over the next few weeks and which will take effect from 1 April.

"This particular budget cannot be business as usual," he said. "It's got to be something different. If we can get enough MSPs, we can achieve things here. That is why I have made this challenge to the other parties."

The SNP accused Mr Scott of abandoning "sound housekeeping" for a soundbite which had all the hallmarks of an ill thought-out policy.

The Scottish Conservatives, who favour a 150 council tax cut, said the Lib-Dem proposals should be taken with a large pinch of salt.