Scottish variable rate

Last updated June 20, 2019

The Scottish variable rate (SVR) was a mechanism which would have enabled the Scottish Government to vary (down or up) the basic rate of UK income tax by up to 3p in the pound. The power was never used (and indeed was allowed to lapse by the Scottish Government in 2007^[1]) and was succeeded by the legislative framework for Scottish public finance in the Scotland Act 2012, which gives the Scottish Parliament the power to set a Scottish rate of income tax.^[2]

The Scottish Government is the executive in Scotland for areas of public policy which are not reserved. The government was established in 1999 as the Scottish Executive under the Scotland Act 1998, which created a devolved administration for Scotland in line with the result of the 1997 referendum on Scottish devolution. Following increasing use of the name "government" in place of "executive" during the first decade of the 21st century, its name was formally changed in law to Scottish Government by the Scotland Act 2012.

The Scotland Act 2012 is an Act of the Parliament of the United Kingdom. It sets out amendments to the Scotland Act 1998, with the aim of devolving further powers to Scotland in accordance with the recommendations of the Calman Commission. It received Royal Assent in 2012.

When legislating for the Scottish Parliament, a number of matters were reserved by the UK Parliament at Westminster. One such reserved matter was taxation; however, this had been a key point in Scottish negotiations relating to parliamentary control. As a means of compromise, Westminster afforded the Scottish Parliament the ability to vary income tax, which was subsequently given the consent of the Scottish electorate in the second question of the 1997 devolution referendum.

The Scottish Parliament is the devolved unicameral legislature of Scotland. Located in the Holyrood area of the capital city, Edinburgh, it is frequently referred to by the metonym Holyrood.

In the United Kingdom reserved matters and excepted matters are the areas of public policy where the UK Parliament has retained the exclusive power (jurisdiction) to make laws (legislate) in Scotland, Wales and Northern Ireland.

The Scottish devolution referendum of 1997 was a pre-legislative referendum held in Scotland on 11 September 1997 over whether there was support for the creation of a Scottish Parliament with devolved powers, and whether the Parliament should have tax-varying powers. The result was "Yes–Yes": a majority voted in favour of both proposals, and the Parliament was established following an election in 1999. Turnout for the referendum was 60.4%.

Therefore, the Scotland Act 1998 granted the Scottish Parliament the power to vary income tax by ±3p in every pound. This power was often referred to as the tartan tax, a phrase first used by Conservative financier and politician Michael Forsyth as a way of attacking the power, using the idea of 'tartan' to get across the idea that it would be an extra tax on Scots alone.^[3] However, the phrase "tartan tax" would only correctly apply if the tax were varied upwards – no phrase was ever suggested if the tax were varied downwards.

The Scotland Act 1998(c. 46) is an Act of the Parliament of the United Kingdom which legislated for the establishment of the devolved Scottish Parliament with tax varying powers and the Scottish Government. It was one of the most significant constitutional pieces of UK legislation to be passed since the European Communities Act 1972 and is the most significant piece of legislation to affect Scotland since the Acts of Union in 1707 which ratified the Treaty of Union and led to the disbandment of the Parliament of Scotland.

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References

↑ Scottish Variable Rate of tax no longer available
↑ "HM Revenue & Customs: Devolved taxation in Scotland".
↑ Tartan Tax History Channel

Scottish variable rate

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References

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