Scottish Government should have kept the Parliament better informed on SVR, says committee

25/02/2011

The Scottish Government should have kept the Parliament better informed about its decisions on the Scottish Variable Rate (SVR), according to a report published today by the Finance Committee.

The ability to alter the basic rate of income tax by up to 3p in the pound is one of the Scottish Parliament’s key powers. However, it will not be available in 2012– 2013, the first full financial year after the May 2011 Scottish Parliament election.

The Finance Committee’s inquiry has revealed that the Scottish Government decided in August 2010 not to commit to further IT work being undertaken on the SVR, in the knowledge that this decision may result in the SVR power for 2012-13 being lost. The committee believes that this decision should, at the very least, have been communicated immediately to the Parliament.

The committee’s report urges the Cabinet Secretary for Finance and Sustainable Growth to make an immediate statement to the Parliament on how the SVR power could be reinstated for tax year 2013-14. The report also stresses that any decision that could further affect the next Parliament’s ability to exercise its SVR powers should be agreed by the current Parliament.

Committee Convener, Andrew Welsh MSP said:

“Our inquiry considered the decisions made by the current and previous administrations in relation to the SVR. Our aim was to make the decision-making process more transparent and to identify lessons about the operation of the SVR for the next Parliament.

“Our report emphasises that the power to alter the SVR belongs to the Scottish Parliament, not to the Scottish Government. 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.”

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