Scottish Labour Devo Questions

Dear [name]

I wonder if you could give me some answers to these questions about your proposals to partially devolve taxation to the Scottish Parliament in the event of a No vote in the independence referendum. Ive been unable to discern the answers from the full version of the Devolution Commissions report and would appreciate if you could clarify your position.

1. Johann Lamont told Gordon Brewer this month that Scotland would not be allowed to have a top rate of tax which was lower than the UK’s top rate. Under your proposals, would Scotland be allowed to undercut the UK on the basic rate (or the 10p rate which UK Labour is committed to introducing if elected in 2015)?

2. Ms Lamont made plain, however, that it would be possible for Scotland to have a higher top rate than the UK. Would Scotland also have the ability to increase the basic rate above the UK level, or only the higher rates?

3. If the answer to Q1 is “No”, then if Scotland ever chose to unilaterally raise the upper rate it would be impossible to ever lower it again – because the proposals only allow the upper rate to be decreased if all other rates are decreased along with it, and doing so would result in Scotland having a lower basic rate than the UK, which would be illegal. Are the proposals deliberately intended to create a situation where irrespective of what government was elected to Holyrood in the future and what its policies/mandate were, it could only ever increase the top rates of tax, never lower them?

4. If, on the other hand, the answer to Q1 is “Yes”, lowering the top rate after a previous increase – so that it was the same as the UK’s but the basic rate was now below the UK’s – could reasonably be expected to cause damaging competition, as workers from the rest of the UK flooded into Scotland looking for jobs on which they’d have to pay lower taxes. Do your proposals contain any measures to counter this problem?

5. Meanwhile, if the UK raised the top tax rate – as Ed Miliband proposes – we know from Ms Lamonts public comments that Scotland would be forced to follow suit. But if the UK then restored it to its original level (perhaps as a result of a different government being elected), would Scotland be unable to do so for the reasons outlined in Q1, and be forced to keep an upper tax rate higher than that of the UK?

6. If the answer to Q5 is Yes, does that mean that a UK government could, if it chose to for any reason, deliberately engineer a situation whereby it had a permanently lower top rate of tax than Scotland, putting Scotland at a locked-in disadvantage by incentivising the wealthy to move out of Scotland to enjoy the lower top rate in the rest of the UK?

Thank you in advance for your assistance.

[your name]