Meeting of the Parliament 11 February 2016
I welcome the opportunity today to propose the first ever resolution in respect of the Scottish rate of income tax. This new power represents an important step in Scotland taking greater responsibility for our own financial affairs and being able to exercise those responsibilities within the context of the budget process. I welcome the opportunity that this power gives for real debate about issues that are of vital importance to the people of Scotland.
Parliament is aware that the rate that we set through the Scottish rate resolution is vital in determining the funding that will be available to support the Scottish budget for 2016-17. Stage 2 of the Budget (Scotland) (No 5) Bill was completed yesterday; agreeing the motion today will allow the bill to progress to stage 3, after the brief February recess.
If passed, the Scottish rate will come into effect from 6 April and will apply to the non-savings and non-dividend income of Scottish taxpayers. We need to set a Scottish rate because, on the same date, the United Kingdom Government will switch off 10p in every £1 of income tax in Scotland, thereby reducing our funding by £4.9 billion. For the first time, therefore, as part of the Scotland Act 2012 powers, we are required to set a rate for Scotland.
It is important that, unlike the other tax powers in the Scotland Act 2012, the Scottish rate of income tax is not a fully devolved tax, but remains part of the UK income tax system, so its collection will be delivered by HM Revenue and Customs, as income tax is now. The preparations to enable that to be taken forward have been the subject of extensive involvement of HMRC, in dialogue with the Scottish Government, to ensure that the necessary arrangements are in place. They have been lengthy preparations to ensure that, on 6 April, we have in place the operational arrangements to ensure that tax can be collected and utilised to support public services.