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Society in discussion over Calman tax powers

27 July 2010

Michael Clancy, Director of Law Reform at the Law Society of Scotland, has been invited to sit on the Calman Implementation Group, which will look at implementing proposals contained in the Calman Commission review of devolution.

The group, co-chaired by Scottish Secretary Michael Moore and Exchequer Secretary to the UK Treasury, David Gauke, met yesterday in Edinburgh, to discuss how the proposals would be taken forward. Its members include representatives of the Law Society of Scotland and the Institute of Chartered Accountants in Scotland.

Under Calman’s proposals, Scottish income taxes set by Westminster will be kept 10p in the pound below the UK rate, with a proportional cut in the nation’s central government grant. Holyrood would then be free to top this up with its own income tax rate, determined by its budgetary requirements.

Mr Gauke said that one of the first questions the group needed to answer was how to define a Scottish taxpayer, and whether to include people living in England but workng for a Scottish company, and vice versa. The aim was to achieve minimum disruption and difficulty for business while achieving financial accountability for the Scottish Government.

Mr Moore said he believed that much of the necessary software to collect the tax was already in use and could be adapted without too much difficulty.

Shortfall question

Speaking after the meeting, James Aitken, a member of the Society's tax law and constitutional law sub committees, who deputised for Mr Clancy, said: "The meeting was very positive and I was particularly pleased to see that a large number of the proposals put forward by the Society have already been taken on board and will be implemented.”

First Minister Alex Salmond has voiced concern that recent changes in the income tax regime – particularly the raising of the personal allowance – undermine Calman’s calculations, leaving a potential shortfall of £250m in Scotland’s budget.

However, Mr Moore confirmed that although broad enabling powers would be dealt with in the new Scotland Bill, being tabled this autumn, the precise details of implementation could be left to secondary legislation. This, he argued, would give Holyrood the flexibility to ensure Scotland did not lose out from changes made at Westminster.