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Lamont pledges wide-ranging Holyrood powers after review

SCOTTISH Labour will fight the 2015 Westminster election on a pledge to give the Scottish Government the power to tax the better off more heavily if voters reject independence in September's referendum, party leader Johann Lamont has announced.

JOHANN LAMONT: The Scottish Labour leader announced her party's Devolution Commission findings in Edinburgh. Picture: Gordon Terris
JOHANN LAMONT: The Scottish Labour leader announced her party's Devolution Commission findings in Edinburgh. Picture: Gordon Terris

Unveiling the findings of her party's devolution commission, she said the Scottish Parliament should have much greater control over income tax.

Under plans expected to be approved at a party conference in Perth at the weekend, Holyrood would become responsible for setting three quarters of the basic rate of income tax.

In addition, MSPs would be able to raise - though not lower - the two top rates relative to the basic rate.

The proposals were part of a wide-ranging package to enhance the powers of the Scottish Parliament, and also local councils, in the event of a No vote in September's independence referendum.

The internal commission of senior MPs and MSPs also said Holyrood should have greater influence over Crown Estate activities, assume responsibility for housing benefit, and take on responsibility for the Work Programme - a scheme to get unemployed people back into jobs - from the Department Of Work and Pensions.

Unveiling the commission's Powers With A Purpose report in Edinburgh, Ms Lamont indicated a future Labour administration at Holyrood would use the new income tax powers to restore the top rate to 50p after it was cut to 45p by the UK Government.

She said there was a "strong case" for the move and, in an attack on First Minister Alex Salmond's refusal to back a 50p top rate for an independent Scotland, she added: "I disagree with the Scottish Government. They don't seem to have accepted that those with the broadest shoulders should carry the biggest burden."

Giving MSPs powers to raise but not lower the top rates relative to the basic rate was designed to prevent Scotland from becoming a "tax haven" for London's super-rich, said insisted.

The commission, set up two years ago, also called for a "more progressive" replacement for the council tax to be created on a cross party basis.

Overall, it claimed the tax proposals would put Holyrood in control of about 40% of the money it spends, against 12% at present.

The long-awaited measures had threatened to cause a damaging rift between MSPs relaxed about greater devolution and more sceptical MPs.

However the final proposals did not go as far as initial recommendations a year ago.

Labour's commission dropped previous suggestions that Air Passenger Duty, a tax on flights, and vehicle excise duty should be handed to Holyrood. The interim report had also called for income tax to be devolved "in full".

In a further attempt to reassure sceptics, yesterday's report also said Scotland should keep its 59 MPs in the event of further devolution and maintain its share of funding under the Barnett formula, albeit adjusted for the Scottish rates of income tax.

The SNP said Labour's measures would make Holyrood responsible for raising 20% of the money it spent.

Deputy First Minister Nicola Sturgeon said: "Today's proposals are a huge watering down of what Labour had proposed in their interim report - it is less about powers for Scotland, and more about a power struggle within the Labour Party - and it is clear Westminster Labour have won.

"The threat of a boycott from Labour's hardline anti-devolutionist MPs - upon whom Ms Lamont would rely to pass the necessary legislation - has won the day."

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Local government

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