UKH

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-30220017

Some interesting stuff being proposed, but once again, im not convinced if this has been thought through (much like the SNPs proposals for independence) but then iguess there is plenty of time to sort it out properly.

Power to alter rates and bands in scotland, (excepting the tax allowance), revenue (or a portion of) VAT, and control over certain benefits. Of course the Scotish gvment will need to spend this on things no longer funded by the central uk pot

But how does this work in reality? For instance, if I living in England bank with rbs, does that mean I pay scottish income tax on interest earned or rUK income tax (or both)? What about if you lived one side of the border but worked the other? I know plenty of scots who have their main home in scotland, but fly down to work for companies in the south... what about home workers?

It will be interesting to see what happens, in reality, I doubt much will change very quickly.

So if you had control what would you do?

In reply to balmybaldwin:

Maybe start building a ruddy great wall along the border?
For 5 reasons. It won't all happen at once but....
1. Scotland has a long history of voting for socialist parties. From all the noises it seems that will be SNP rather than Labour post-indyref but both are essentially socialist parties.
2. Socialist govts tend to spend more on public services which tends to require higher taxes.
3. Even when they vote for better services people tend to still prefer lower taxes (the great electoral paradox) and a proportion of them tend to be prepared to move to get them especially if they are paying at the top end . The fact that move would be within the same country with the same language I suggest would make is easier. The number willing to move with presumably be proportionate to the tax differential as well as other factors.
4. If enough people, especially the higher rate payers, move the tax base shrinks and either services must be cut or taxes must rise.
5. If the latter, go back to 3 and repeat ad infinitum.

In reply to balmybaldwin:

The Scottish Government has always had the power to vary the rate of income tax up or down by up to 3p in the pound, ever since it was established. That power has never been used.

The SNP included the "penny for Scotland" in its manifesto for the first Holyrood election. The SNP did not win that election.

Under the Scotland Act 2012 the Scottish Government's powers to vary income tax were going to be substantially extended in 2016 anyway.

Have a read of this:

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-26630498

In reply to Martin W:

Correct and that power was a real poisoned chalice as whilst the power to vary tax was there, the tax still didn't go to Scotland so all you could do was decrease or increase the costs to people whilst not gaining the benefit to invest in services etc.

In reply to Cuthbert:

Are you sure about that? My understanding is that The Scotland Act 1998 says that any additional revenue from a Scottish rate hike gets paid in to the Scottish Consolidated Fund, which is where the block grant goes. Conversely, any reduction in the tax rate results in money being paid out of the Scottish Consolidated Fund. So a higher rate of income tax in Scotland means that the Scottish Government gets more to spend, and vice versa.

When the provisions of the 2012 Act come into operation I imagine it will all get rather more complicated.

In reply to balmybaldwin:
Scotland would never be able to change this tax in a tax neutral way given that all other taxes remain reserved to the UK.

If Scotland increases income tax without being able to compensate with something else like lower corporation tax or VAT, then businesses and the best people will just leave, it's already hard as it is to prevent them from seeking higher incomes and opportunities in London.

In this situation the only logical thing you can do is

- do nothing and keep scottish taxes at the same level as the UK, in which case the Scottish Parliament will bear the political responsibility of this new power without actually being able to make any use of it

- decrease income tax to attract more businesses and talents, which would probably spark a race to the bottom with the rest of the UK, exactly what the Tories want.

So I totally agree with Brown that this is a Tory trap.

In reply to balmybaldwin:
There are arrangements for this kind of thing for people living in one EU country and working in another. It almost doesn't matter what the rule is so long as there is one.

FWIW, in Switzerland you are normally income-taxed according to your home Canton, not your work one, I believe. Corporation taxes or equivalent deal with infrastructure around the workplace. And where you live (again it doesn't matter how you define[1] it as long as you do) is usually easier to define than where you work.

[1] As there are an odd number of nights in a week, "the place where you spend the majority of nights in a week" is one way.

Neil