MSPs raise financial powers concern

Scottish money A new rate of income tax will come into force in April 2016

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New financial powers already agreed for Scotland will be a "considerable challenge" to implement, a Holyrood committee has warned.

MSPs are concerned about the level of information provided by the UK and Scottish governments to help with the provisions of the Scotland Act 2012.

This includes a new rate of income tax due to come into force in April 2016.

The Scottish government agreed that more clarity was needed and said it was working on this with the Treasury.

The new tax rate will involve the Treasury deducting 10p from standard and upper rates of income tax in Scotland and giving MSPs the power to decide how to raise money.

Start Quote

The committee recognises that there is a considerable challenge for both the UK government and the Scottish government in implementing the financial provisions of the Scotland Act 2012”

End Quote Finance Committee report

But Holyrood's Finance Committee said there was a lack of clarity about forecasts, particularly with the UK's Office for Budget Responsibility (OBR).

It found that considerable work would be needed by both governments to agree proposals to adjust the block grant allocated to Scotland by Westminster.

MSPs also have concerns about "wildly optimistic" OBR forecasts for the land and building transaction tax (LBTT), which replaces stamp duty land tax in April 2015.

They said forecasting for a new landfill tax must be transparent and open.

Finance committee convener Kenneth Gibson MSP said: "We believe it is essential that there is effective parliamentary scrutiny of the implementation process and, in particular, the way in which the UK government will adjust Scotland's block grant to take account of the new financial powers.

"We will continue to closely monitor the accuracy of the OBR forecasts and will take evidence from the chair of the OBR on an annual basis."

The report concluded: "The committee recognises that there is a considerable challenge for both the UK government and the Scottish government in implementing the financial provisions of the Scotland Act 2012.

"Nevertheless, it is essential that there is effective parliamentary scrutiny of the implementation process."

'Missed opportunity'

The report added: "The committee is concerned about the level of information being provided by the two governments as the negotiations progress.

"At the same time, the committee welcomes the commitment of the Scottish government to consult with the Scottish Parliament on the adjustments to the block grant and emphasises the need for sufficient time to be made available to allow the committee to carry out effective scrutiny of the proposal."

A Scottish government spokeswoman said: "We welcome this report and the recognition of the Scottish government's work to take forward the financial provisions of the Scotland Act.

"We agree that the Scottish Parliament and people require greater clarity over changes to the allocation of the block grant and the Scottish government is working actively with HM Treasury to achieve that.

"While welcome, the tax raising powers to be transferred to the Scottish Parliament through the Scotland Act represent a missed opportunity, only giving Parliament control over an additional 17% of Scotland's revenues.

"With full fiscal and economic powers the Scottish Parliament could do more to realise Scotland's full economic potential."

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