John Swinney faced an uncomfortable session of an angry Scottish Parliament yesterday after it emerged that his actions had led to the Parliament losing its tax varying power.
The row erupted after it became known that Swinney had failed to pay annual fees of £55,000 to HM Revenue and Customs to maintain a list of all Scottish income tax payers, and had also refused to meet a new £7m demand from HMRC to pay for an upgraded IT system that would allow the tax to be implemented with 10 months’ notice.
Swinney, the Finance Secretary in Alex Salmond’s minority SNP government, made a statement on the matter to Parliament, seeking to damp down what has fast become a major political issue.
It now appears that the Parliament’s ability to vary the rate of income tax by up to 3% (the so called Tartan Tax) has not been available for over three years. And Swinney stood accused of hiding this fact from the parliament that he is supposedly accountable to.
Scottish Secretary Michael Moore has explained that any new administration elected next year would now not be able to use the power again until 2013/14.
Swinney has been specifically asked in Parliament several times whether he would raise tax through this specific power. He has always given the impression that he had considered the idea and rejected it, but at no time did he indicate that it would actually have been impossible for him to do so.
John Swinney claimed that HMRC is to blame for the situation and that the money was better spent on services than IT systems – but it simply was not his decision to make. He did admit that he may have made errors of judgement in not informing Parliament sooner, but for many MSPs this was simply too little too late.
Iain Gray, the Labour leader, called for Swinney to make a full apology or to consider his position. He described Swnney’s actions as, “a deliberate and systematic attempt over years” to cover up the situation and to mislead both the Parliament and the Scottish people.
Annabel Goldie for the Tories wondered what the SNP reaction would have been if Westminster had denied the Scottish Parliament the right to exercise its powers.
The matter was concluded with Swinney being condemned for his actions by 77 votes to 46 in a damning amendment signed by Labour, the Conservatives, the Liberal Democrats and the Greens, which called it “an abuse of power for the Scottish Government to abandon the Scottish variable rate of tax without the approval of the Parliament.” And opposition leaders also called for the Finance Committee to carry out a full investigation.
Whether the tax varying powers would actually have been used or not is a moot point. The Parliament was given the ability to do so because the people of Scotland voted for the power to be put in place. Back in the historic 1997 referendum that established the Scottish Parliament, the tax varying power was supported by 63.5% of Scottish voters.
The SNP government clearly feels that it can overrule the will of the Scottish people. But with an election just five months away, Alex Salmond and co may come to regret that decision.