There have been varying interpretations of what the Smith Report says on fixing Income Tax for Scotland and for the rest of the UK.
Labour and the Lib Dems quote the part which says “Income Tax will remain a shared tax and both the UK and Scottish Parliaments will share control of Income Tax. MPs representing constituencies across the whole of the UK will continue to decide the UK’s budget, including Income Tax”.
They wish this to mean that Scottish SMPs in Edinburgh can decide Scotland’s Income Tax rates and thresholds with no advice or votes from the rest of the UK, whilst Scottish MPs can come to Westminster to vote on the tax rates and thresholds for the rest of us.
However, Smith goes on to say “Within this framework the Scottish Parliament will have the power to set the rates of Income Tax and the thresholds at which these will be paid for the non savings and non dividend income of Scottish taxpayers. As part of this there will be restrictions on the thresholds and rates the Scottish Parliament can set. All other aspects of Income tax will remain reserved to the UK Parliament.”
Conservatives take this to mean that English votes for English issues would obviously apply to Income tax rates and thresholds, as these are no longer a UK reserved matter under the Smith settlement.
The decision to let Scotland settle her own Income tax rates and thresholds intensifies the pressure and the need for English votes for English issues, including these crucial tax powers. Some Labour MPs in private see the justice of England’s cause. Smith does not rule out justice for England, which must be getting much closer as we contemplate these large powers going to Scotland.