Did John Swinney mislead MSPs on the Tartan Tax?

As with all good Budgets, it is only once the dust settles that the implications of the measures announced become clear and Scotland is no exception. Following the publication on Wednesday of the SNP government’s draft Budget, finance secretary John Swinney is facing calls from the main opposition parties to explain to parliament the government’s decision to forego its albeit limited tax varying powers.

As with all good Budgets, it is only once the dust settles that the implications of the measures announced become clear and Scotland is no exception. Following the publication on Wednesday of the SNP government’s draft Budget, finance secretary John Swinney is facing calls from the main opposition parties to explain to parliament the government’s decision to forego its albeit limited tax varying powers.

Under the terms of the devolution settlement from 1999, the Scottish government and parliament have enjoyed the power to vary the basic rate of income tax in Scotland by 3p either up or down, dubbed the “Tartan Tax”.

The spat between parties at Holyrood comes after it was disclosed that in 2007, the SNP government had stopped paying HM Revenue and Customs a yearly fee of £50,000 to maintain the database of Scottish taxpayers that would be required should Holyrood want to use the tax varying powers.

Presenting his budget proposals to MSPs last week, Mr Swinney explained:

Within the parliament’s existing revenue powers, we have explored options for maximising our income. We have been mindful of the need to consider the effect of the significant tax rises that the UK government has announced before we act. I therefore confirm that we will not raise the Scottish variable rate of income tax.”

However, on Thursday the Scottish secretary, Michael Moore, announced that having not paid the required administration fee to HMRC since 2007, no Scottish government would be able to use the power again until 2013/14 at the earliest. He said:

“It is now clear that because the system has not been maintained at the previous ten-month readiness, HMRC would require two years’ notice to invoke the SVR (Scottish Variable Rate). I am conscious that the various political parties will be considering their policy programmes for next year’s Holyrood election.

“I felt it was imperative to inform them that this tax power, which formed part of the original devolution settlement, is not available to whoever forms the next Scottish government.”

Scottish Labour has now lodged a formal complaint against Mr Swinney under the ministerial code, alleging the finance secretary had failed to make MSPs aware of the decision taken in 2007. Labour’s spokeswoman on constitutional affairs, Pauline McNeil, argued:

“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.

“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.”

Meanwhile, former first minister, Jack, now Lord, McConnell responded by declaring:

“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.”

What will come of the opposition calls for an investigation remains to be seen. However, what is certain, as the Herald has concluded, is:

“If Swinney is found to have misled parliament, it could destroy his political career.”

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