By David Scott in Edinburgh
25 February 2011
MSPs have criticised Finance Secretary John Swinney for failing to keep the Holyrood Parliament informed about the lapsing of the ‘tartan tax’ powers.
In a report published today, the influential finance committee also demanded that Swinney make an early statement on how the power can be reinstated for 2013/14.
The power to levy what is officially known as the Scottish Variable Rate gave the Parliament the right to vary income tax by up to 3p in the pound.
Although the power has not been used in the 11 years since devolution came into effect, the disclosure that the Scottish Government had allowed it to lapse led to opposition party claims of a ‘cover up’ and an apology by Swinney in Parliament last November.
The minister argued that the power had lapsed because the Scottish Government was not willing to pay Revenue & Customs £7m to upgrade the IT needed to administer the tax.
The all-party committee’s report follows its own inquiry into the controversy and points out that the Scottish Government had decided in August 2010 not to commit to further IT work being undertaken on the SVR
It added: ‘This decision was made in the knowledge that it may result in the SVR power for 2012/13 [the first full financial year after the Scottish Parliament election this May] being lost.
‘The committee consider that this matter should, at the very least, have been communicated immediately to the Parliament.’
The immediate issue was how the Scottish Government intended to re-activate the SVR in 2013/14 through its discussions with Westminster, the committee warned.
Committee convener Andrew Welsh said the report emphasised that the power to alter the SVR belonged to the Scottish Parliament not to the Scottish Government.
He added: ‘The Parliament should therefore have been kept informed throughout this session about the Scottish Government’s position on the SVR and its ongoing dispute with HMRC about the costs and technical difficulties associated with maintaining the state of readiness.’
