Independence: Full control of income tax if Scotland says ‘no’

George Osborne: Sought assurances from Andy Coulson over phone hacking. Picture: Neil Hanna
George Osborne: Sought assurances from Andy Coulson over phone hacking. Picture: Neil Hanna
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SCOTLAND could be given full control of income tax in the biggest fiscal shake-up since the creation of the UK – if it rejects independence.

Under radical Treasury plans, Chancellor George Osborne is said to be ready to hand control of income tax to the Scottish Parliament in the event of a “no” vote in a referendum due to be held in 2014.

However, the Treasury would retain control of corporation tax amid fears businesses in England could be damaged if the Scottish Government carried out plans to cut the tax north of the border to below UK levels.

The plans could also create fiscal challenges. Although Scotland raises more than its UK population share of corporation tax, its share of income tax is less.

This would mean a Scottish Government with full powers over income tax might have to raise rates to avoid a deficit.

A Treasury source said: “The Chancellor is prepared to consider handing over complete control over income tax to Scotland but there is no way he is going to give control over corporation tax to Alex Salmond.”

The Treasury plan comes after the Scotland Act was recently passed, giving Holyrood responsibility for 10p in the pound of the existing 20p income tax rate.

At the moment, Scotland has the ability to raise about 15 per cent of its revenue through business rates, council tax and income tax.

A Treasury spokeswoman said: “The Scotland Act has just been passed and provides the biggest transfer of fiscal powers from London since the creation of the UK. We are now focusing on implementing these powers in a timely fashion.

“Following the referendum on independence, devolution of further powers will be considered.”

Third favour split in England

ALMOST a third of voters in England would be happy to see an independent Scotland, according to a new poll.

The ComRes survey found 28 per cent of people in England would favour a split while 57 per cent wanted the UK to remain together and 15 per cent didn’t know.

Meanwhile, former Scottish Secretary Michael Forsyth claimed on BBC’s Question Time that the Queen and other Royals would “move heaven and earth” to preserve the United Kingdom in the face of the SNP’s drive for independence.