With the Scottish Parliament back from its summer recess this week, the First Minister, Nicola Sturgeon, has set out her government’s legislative programme for the year ahead.
Eager to move the debate away from the simmering summer discussions over the country’s constitutional future and the fall-out of the UK’s decision to vote to leave the European Union, this was a programme packed full of announcements focused on the day to day policy ambitions of a government elected to its third successive term of office just 4 months ago.
It is also arguably the most important – and powerful – legislative programme in the post-devolution era, with the Scottish Parliament taking ownership of a range of new tax and spending powers already (and soon to be) devolved from Westminster from Holyrood.
Widely trailed announcements on the government’s ambitions to prioritise investment in education, infrastructure, attainment and gender inequality dominated the headlines as expected. But Ms Sturgeon was quick off the starting blocks in outlining the ways in which her government plans to make use of the new tax and spending powers being devolved to focus on – in the First Minister’s own words – “the nuts and bolts of delivery.”
From a tax perspective, highlights among the 15 new bills due to be introduced between now and June of next year include:
• The Air Passenger Duty Bill enabling the introduction of a replacement tax by April 2018 and the halving of the overall level of APD in Scotland by the end of the 2016 – 2021 Parliament
• A Social Security Bill – presently being consulted on – which will give the Scottish Parliament the power to create a distinctive Scottish Social Security system
• The annual Budget Bill, to be presented to Parliament by Scotland’s new Finance Secretary, Derek Mackay, before the end of this year
The specifics of how Scotland’s new tax powers will be used will not be announced until the draft budget for 2017-18 is presented to Parliament.
But the main Programme for Government does provide an indication of the Scottish Government’s thinking in a number of areas related to taxation. These include:
• The Scottish Government will continue to make the case for a greater share of tax powers, arguing that the Scotland Acts of 2012 and 2016 will leave it responsible for around 40% of devolved spending
• Establish a working group between the Scottish Government and Scottish Parliament tasked with revising the processes for scrutinising and approving the Scottish Budget, reflecting the new fiscal powers contained in the Scotland Act 2016. Plans for Scottish tax rates will be a key remit of this group
Scottish rate of income tax (SRIT)
• A commitment to freezing the basic rate of income tax in Scotland
• Guaranteeing increases in the personal allowance and restricting increases in the personal allowances of higher rate tax payers to a maximum of the rate of inflation
Land and Buildings Transaction Tax (LBTT)
• Together with the Scottish Landfill Tax, the Programme for Government states that this is an example of the government’s ability to “effectively and competently design taxes on a sound base of consultation and evidence”
• Plans to lift the council tax freeze from 2017, change rates for the highest banded (E-H) properties, extend the council tax reduction scheme, increase the child allowance within the council tax reduction scheme and introduce legislation to end council tax discount for second homes from April 2017
However, the constitutional situation wasn’t far from MSP’s minds as the First Minister also announced plans to consult on a second referendum on Scottish independence if the government concludes that independence “is the best or only way to protect Scotland's interests” following the June vote to leave the EU.
Responding for the opposition, Scottish Conservative leader Ruth Davidson accused the Scottish Government of stifling the Scottish economy with the threat of a second referendum. She also set out Conservative plans for competitive and fairer taxation (based on the report of the party’s commission on taxation earlier this year) including reforms to LBTT and Air Passenger Duty. Davidson was particularly critical of LBTT, saying the rollout of the Additional Dwelling Supplement had led to people facing vague and conflicting information from solicitors, estate agents and even HMRC on rules for payment.
Scottish Labour accused the government of a lack of ambition while the Scottish Greens said the government had to accept it was now a minority administration that would require the support of other parties to pass legislation. Scottish Liberal Democrat leader Willie Rennie accused Nicola Sturgeon of using the summer recess to “talk up the prospect of a second independence referendum instead of getting on with the day job."
CIOT Scotland External Relations and Branch Support Officer
Friday 9 September 2016