HC Deb 31 January 1996 vol 270 cc981-3
1. Mr. Jacques Arnold

To ask the Secretary of State for Scotland what discussions he has had with the Treasury concerning the practicalities of a different rate of income tax for Scotland. [10785]

The Secretary of State for Scotland (Mr. Michael Forsyth)

Labour, Liberal and Scottish National party support for a tartan tax will be immensely damaging to Scotland and create huge problems for employers on both sides of the border.

Mr. Arnold

Bearing in mind the huge costs and problems for employers in Scotland, and although I, as an English Member, would welcome the transfer of jobs from Grangemouth to Gravesham, how on earth does my right hon. Friend think that Labour and the other parties can justify to the Scottish people that impact on jobs in Scotland?

Mr. Forsyth

My hon. Friend is absolutely right. The tartan tax will be a tax on Scotland's jobs and would certainly disadvantage Grangemouth. He also has considerable cause for worry about his constituents in Gravesham, because Labour is proposing a tax on jobs—the social chapter—that would apply to the whole of the United Kingdom.

Mr. Canavan

Can. the Secretary of State name any Parliament in the world that does not have revenue-raising powers or any country in the world, apart from Scotland, that has its own laws and legal system but no Parliament of its own to pass those laws?

Mr. Forsyth

The hon. Gentleman should move back two Benches and join the Scottish Nationalists if he wants to ask questions like that. In case he has not noticed, the United Kingdom is the greatest country in the world, with the greatest history. All parts of the United Kingdom have benefited from that.

Sir Hector Monro

Is my right hon. Friend aware that, during the passage of the Scotland Bill in the 1970s under a Labour Government, it was generally accepted that the advice from Treasury Ministers to the Government was that it was impossible to introduce a differential income tax in the United Kingdom? What is the view of the Treasury Ministers in our Government?

Mr. Forsyth

I have to agree with my right hon. Friend. He is right. It was considered impractical for the same reasons as Labour Members have opposed a local income tax. They argued that a local income tax would be difficult to collect because of great administrative problems. People are taxed not according to where they live but according to where their employer is. There is no doubt that a tartan tax would create enormous problems and anomalies. For example, Scottish Labour Members would not pay the tartan tax even though they were Scottish Members because they are paid in Westminster in England and would therefore be exempt from it.

Mr. Menzies Campbell

The Secretary of State has obviously taken a careful interest in the effect of taxation on employment. Would he be kind enough to tell us his assessment of the consequences for employment in Scotland of the tax increase—which is now equivalent to a net 6p in the pound—that his Government have imposed since 1992?

Mr. Forsyth

The hon. and learned Gentleman has a real cheek. To be fair to his party, it is at least honest—unlike some Opposition Members who vote for our tax reductions and then complain about the public expenditure consequences. The hon. and learned Gentleman and his party want income tax to go up. Although their partners in the Scottish Constitutional Convention say that there is no tartan tax, he and his hon. Friends are going around promising to spend it even before it has been brought into being.

Mr. Peter Atkinson

Will my right hon. Friend speculate on the tartan tax's impact on businesses on either side of the border? Would it encourage more of my constituents in Northumberland to shop in Scotland, or even more Scots to travel from the border regions to Newcastle shopping centres?

Mr. Forsyth

Far be it from me to give any credibility to the idea of people not shopping in Scotland, but my hon. Friend is right. The tartan tax would add to the costs of employment and of businesses. It would put prices up in shops in Scotland. As my hon. Friend points out, his constituents would benefit from that. Even more seriously, together with the crackpot policies for a Parliament whose funding would still be determined here, it would lead eventually to the fragmentation and break-up of the United Kingdom, which would mean huge price increases in Scotland, high inflation levels and spiralling unemployment.

Mr. George Robertson


Mr. Jenkin

Cluck, cluck.

Mr. Robertson

Dear, oh dear. That comment, Madam Speaker, was from the parliamentary private secretary to the Secretary of State.

Now that the Secretary of State has had his wrists slapped for breaking the guidelines, will he apologise to the Scottish Office information directorate for using it as a scapegoat for putting party propaganda in press releases, and to the Scottish taxpayer for peddling propaganda at their expense? When will he realise that the truth about the popularity of our plans for a Scottish Parliament will always beat the lies about non-existent taxes?

Mr. Forsyth

When will the hon. Gentleman rise to the occasion that being shadow Secretary of State for Scotland requires? On the use of the phrase "tartan tax", before I used it—and I did so in the first press release that I issued from the Scottish Office—I asked for advice from the permanent secretary and I was assured that it would be in order. The permanent secretary's advice changed after the hon. Gentleman complained that the phrase was in widespread use and now a matter of political controversy. I have always accepted that advice. Why is the hon. Gentleman so afraid of the tartan tax? Is it because he knows that the people of Scotland do not want to pay it? If it is non-existent, let him rise in the House and tell the people of Scotland that he will drop his crackpot proposals to have a tax-raising power for his Scottish Parliament, which would impose that tax on the working people of Scotland.

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