NEW powers devolved to Holyrood under the Scotland Bill will not result in any “meaningful reform”, according to an independent think tank.
Reform Scotland says the devolution of income tax, which will be the source of 71 per cent of all tax revenues raised by the Scottish Parliament, will not help economic growth.
Holyrood, the report points out, will control less than 30 per cent of the total tax income raised in Scotland, while the level of welfare spend to be devolved amounts to less than 15 per cent.
For this reason, the think tank says, the Government should peg the level of income tax to that in the rest of the UK until a wider range of taxes comes under the control of the Scottish Parliament.
Chairman Alan McFarlane said: “The new tax and welfare powers proposed by the Smith Commission and now being enacted at Westminster are not likely to allow for real reform.
“The devolution of income tax is a blunt instrument which does not offer the opportunity to create a better environment for economic growth.
“Until the Scottish Parliament has control over a sufficiently varied basket of taxes, we would call on the Scottish Government to peg income tax in Scotland to the UK rate.
“Similarly, we believe a further devolution of welfare powers is required to enable any meaningful welfare reform.”
A Scottish Government spokesman said: “The Scottish Parliament recently agreed with the Deputy First Minister’s proposal to set the Scottish Rate of Income Tax at 10p for 2016-17. This is the same as those taxpayers in the rest of the UK. The income tax powers we currently have do not allow us to make income tax fairer.
“We believe Scotland needs full economic powers beyond those in the Scotland Bill if we are to fulfil the country’s potential. In terms of the tax powers which are being devolved, we will set out our proposals in due course.”
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