Scotland politics

Income tax powers officially devolved to Holyrood

Scottish money Image copyright Getty Images
Image caption Holyrood takes on control over income tax rates and thresholds from April 2017

The Scottish Parliament has officially taken on significant new tax powers with the formal transfer of control from Westminster.

Orders have been passed in the House of Commons giving Holyrood control over income tax powers worth £12bn.

Control over income tax rates and thresholds is being devolved under measures agreed in the Scotland Act.

Both the UK and Scottish governments welcomed the "landmark" powers, which take effect from 2017/18.

Scottish Finance Secretary Derek Mackay will set out proposals on how to use the powers in his draft budget on 15 December.

Mr Mackay said: "We welcome these legislative steps which will increase the Scottish Parliament's powers over income tax from next year. The new powers will allow us to design an approach to taxation which will suit Scotland's needs, balancing the need to invest with the recognition that many households are facing difficult economic challenges.

"As we set out earlier this year, our income tax proposals for 2017/18 will aim to protect lower income taxpayers and generate extra revenue for us to invest in public services."

'Unprecedented power'

First Minister Nicola Sturgeon has already indicated that her government will not pass on tax cuts proposed at Westminster for the highest bands.

The Scottish Conservatives oppose having higher taxes in Scotland than elsewhere in the UK, while both Labour and the Lib Dems want to increase the standard rate by 1% to protect public spending. The Scottish Greens say there should be new rates and bands to give a tax cut to those on lower than average incomes and workers on higher wages should pay more tax.

The devolution move, on St Andrew's Day, comes two years on from the publication of the Smith Commission on extra powers for Holyrood following the 2014 independence referendum.

Scottish Secretary David Mundell said the "landmark" powers make Holyrood "one of the most powerful devolved parliaments in the world".

He said: "The Scottish government will now have unprecedented power to shape the economy of Scotland. Crucially, for the first time, it will not only have to account to the people of Scotland for the money it spends, but also for the money it plans to raise.

"Through the Scotland Act 2016 and, most recently, the Autumn Statement, the UK government has provided more powers and more funding for Scotland. It's now over to the Scottish government to set out how it plans to use these powers to drive jobs and growth in Scotland."

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