Income Tax (Hansard, 5 March 1997)

§ 7. Mr. David Shaw
To ask the Secretary of State for Scotland what assessment he has made of the mechanisms for the introduction of a separate system of income taxation in Scotland. [17319]

§ Mr. Michael Forsyth
A separate income tax system in Scotland would impose an unwelcome burden on taxpayers and employers, requiring a major change in employers' payrolls. It would place an administrative burden on companies with Scottish and English employees, and cost the typical Scottish family more than £6 per week in extra income tax.

§ Mr. Shaw
Will my right hon. Friend confirm the fact that the bureaucracy surrounding the administrative system for a tartan tax would mean incorporating names such as those of Scottish people who live in my constituency of Dover and Deal, those of English people in my constituency, and even those of Scottish Members of Parliament at Westminster—but that many of them would not pay tax unless they were caught by the 90-day or 183-day rule? Would not that massive bureaucracy have to be paid for out of a tax levied on Scottish pensioners?

§ Mr. Forsyth
I do not have a clue. I do not know what the costs would be; the people who propose the tax are not prepared to tell us. Certainly employers would have to have two sets of tax tables. Certainly the system would operate on the present residency rules, so Scottish Members of Parliament might be exempt from the tartan tax if they spent more than a certain number of days working outside Scotland. That might encourage many Scottish Opposition Members, especially Labour Members, to attend here more often. That is the only benefit that I can see. As for the bureaucracy, we know that when the previous Labour Government proposed to include such a tax under their Scotland Bill, they were advised by the Inland Revenue that it would take at least five years to put the necessary systems in place. Certainly the system would take time and would be expensive, and the cost would be borne by all taxpayers and all employers.

§ Mr. McAllion
Has the Secretary of State forgotten that he was the prime mover in introducing a separate poll tax for Scotland—a mad experiment that cost the taxpayer billions of pounds and had to be scrapped within five years? Perhaps he will explain to the House why he continually warns Scottish voters against giving a tax-raising power to a parliament that they would control, while leaving them at the mercy of 22 tax rises imposed by this Parliament, which by definition they can never control.

§ Mr. Forsyth
If the hon. Gentleman wants to mention 22 tax rises, he might also mention 25 tax reductions. As for his point about poll tax and income tax, if he does not understand the difference between poll tax and having different rates of income tax in different parts of the United Kingdom, I suggest that he has a word with the former leader of his party, Neil Kinnock, who warned that 893 as soon as we start introducing separate tax-raising parliaments in Britain, we begin the break-up of Britain. That is what Opposition Members are committed to.

Mr. Robert G. Hughes
Among all the things that, as my right hon. Friend has said, are not clear about the possibility of a mad tartan tax under a Labour Government, is not one thing clear—that the tax would be levied on Scottish pensioners? Should not we know whether any estimate has been made of how many of them would have to flee from Scotland to England to avoid that madcap tax?

§ Mr. Forsyth
I notice that Opposition Members find this funny. To be fair to the hon. Member for Hamilton (Mr. Robertson), he has confirmed that Scottish pensioners would have to pay the tartan tax; they will get a smaller return on their savings than English pensioners, and people whose pensions have been earned in Scotland will be subject to an extra tax burden. I find it difficult to understand why people in Berwick should have a better return on their pension than people in North Berwick. I dare say that that might well result in people moving south of the border for their retirement. That is a particular wickedness of the policies proposed by Opposition Members.

§ Rev. Martin Smyth
Does the Secretary of State agree that taxation should be uniform throughout the nation? Questions are being asked about the taxing powers of a devolved Administration, so will he bear it in mind that while the previous Northern Ireland Government had powers over death duties they refused to use them because that would have put them out of kilter with the rest of the nation? That was a Unionist Administration.

§ Mr. Forsyth
I entirely agree. It is certain that the exercise of separate income tax-raising powers is a threat to the unitary system. It is also the case, as the hon. Gentleman mentioned the Stormont model, that while Stormont was able to operate in a discrete range of areas—much narrower than is proposed for the Scottish Parliament with its tartan tax-raising power—the quid pro quo was a substantial reduction in representation in the House.
I can see no case at all that is in Scotland's interest that would result in a reduction of the number of Scottish Members of Parliament and the loss of the office of Secretary of State; it is this House that will determine the expenditure by a Scottish Parliament—expenditure that would be considerably greater than the amount spent in England.
The proposal threatens not only the prosperity of pensioners and working people in Scotland but our public services, because it would reduce our voice here at Westminster, where the key decisions are taken, and our ability to defend Scotland's interests.

§ Mr. Stewart
Does my right hon. Friend agree that the scandalous admission by the hon. Member for Hamilton (Mr. Robertson) that the tartan tax would be levied against health care provision shows the sick priorities of the Labour party? Should not its slogan be, "Vote Labour and put more politicians before patients?"

§ Mr. Forsyth
Not only people who have made private provision for health care will suffer: anyone who has a 894 company car will pay more if it travels on Scottish roads or even if it crosses the border. That seems particularly inequitable. As the right hon. Member for Dunfermline, East (Mr. Brown) has made it clear that there is no extra money, the costs of the Scottish Parliament—we estimate them at just under £80 million in the first year—will have to come out of health service, local government and other spending priorities. It is a nonsense proposal from a party that is prepared to put its own interests before those of the people.

§ Mr. McFall
In his 1992 election manifesto, the Secretary of State, in his modest way, said: Everyone knows someone who has been helped by Michael Forsyth. Five years later, as a result of broken tax promises, everyone in Scotland knows someone who has been taxed 22 times over by the Government since 1992.
Is the Secretary of State proud of the fact that the constituents of the 10 Tory Members of Parliament have paid more than £500 million in extra taxes since 1992? Is not that the real tartan tax for the people of Scotland? Can we hope that the Secretary of State, in his last ministerial appearance at the Dispatch Box, will offer the electorate of Scotland one final apology for the 22 tax rises and for the Government's deception of the Scottish electorate in their tax promises in 1992?

§ Mr. Forsyth
The whole House will have noted that the hon. Gentleman has not been prepared to defend his party's policy of levying a tartan tax on the people of Scotland. The House knows that Labour Members have spent the whole of this Parliament complaining that the Government have not spent enough. That they have the cheek to stand, uniquely in Scotland, on a platform of raising an additional tartan tax, yet complain about taxation levels, beggars the imagination. The truth is that the Labour party takes its votes in Scotland for granted, which is why it wants, uniquely, to tax people in Scotland and not people in England or elsewhere in the United Kingdom.