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Baroness Ramsay of Cartvale: Clause 72 sets out the action the Treasury would have to take if it appeared that the tax-varying power was going to be significantly affected by published or forthcoming changes to the UK income tax system. Such changes could be made or published in a variety of ways, and it is necessary for the Bill to recognise this.

Changes to the income tax code may be first published by Treasury or Inland Revenue. They are often, of course, announced by the Chancellor in his Budget. Clause 72 as currently drafted explicitly covers all of these possibilities.

If Amendment No. 286 were accepted, doubts could arise as to the point at which Clause 72 is triggered by satisfying the condition on subsection (1)(b), or there may be doubt as to whether the clause is triggered at all. At the very least it could introduce delay into the process of considering revised tax arrangements for Scotland. There would be no purpose to that delay. There is no question of lack of proper parliamentary scrutiny since any change to the arrangements already provided in Clause 69 of this Bill would need to be the subject of primary legislation by the UK Parliament.

I turn to Amendment No. 293. Section 832(1) of the Income and Corporation Taxes Act 1988 defines "the Board" for the purposes of all enactments relating to income tax as "the Commissioners of Inland Revenue". As Part IV of the Scotland Bill, if enacted, will form part of the Income Tax Acts, there is no need to define the term specifically in the Scotland Bill, in much the same sense that if the term appeared in an income tax provision in a Finance Bill, there would be no need to define the term in that Bill.

In the light of those explanations which I hope satisfy the very understandable points of query raised by the noble Earl, I hope that he will feel able to withdraw the amendment.

The Earl of Balfour: I am most grateful to the noble Baroness for her reply. I believe that each Bill, which of course becomes an Act of Parliament, should stand on its own and not leave the ordinary person reading legislation wondering, just as I had to wonder, what is "the Board". In that respect, I rather wish that the noble Baroness, Lady Ramsay, would think again between now and Report, because I believe that we must never leave the ordinary citizen in doubt. Otherwise, I am grateful to the noble Baroness for what she has said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.45 p.m.

Lord Mackay of Ardbrecknish moved Amendment No. 286ZA:

Page 33, line 14, leave out from ("or") to ("a") in line 15 and insert ("is").

The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 286ZB and 286ZC. Clause 72 relates to changes in the income tax structure. I now understand more clearly what is behind this part of the Bill than I did at the beginning of today. If I understand an exchange we had earlier--and I am

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repeating it because I was not entirely sure if my question was clear to the Minister when he answered it and at least one other of my noble friends thought the same--when we deal with this 3p or £420 million, the question of finding some other way to raise the money will be triggered only if the changes which mean that 3p does not raise £420 million are because of changes in the tax structure of the United Kingdom. If, because of economic changes--when perhaps the number of basic rate taxpayers has declined because of an economic downturn--the 3p raises only £350 million or £400 million, so be it, the Scottish Parliament is stuck with that. The nods from the Government Front Bench tell me that I have that right. It is only if there are structural changes which result in the 3p not raising £420 million that Clause 72 will be triggered.

I have tabled three amendments which are probing. They are of the "What does it mean?" variety. I understand Clause 72(1)(b) which states

    "that proposal is one made and published by the Treasury or the Board, or ... appears to the Treasury to be a proposal to which effect is likely to be given by Act of Parliament".
However, I do not understand the expression,

    "without having been so made and published",
which is in brackets. If the proposal has not been made or published, how the devil can the Treasury make any decision about what it is? Therefore, why does the subsection include the words,

    "without having been so made and published"?
If the proposal has not been made or published, it does not seem to me that there is a problem. Why are those words there?

Amendment No. 286ZB removes the words "it appears to the Treasury". Why are those words there and why is it only the Treasury? What will happen if the Treasury considers that the changes will not affect the Scottish rate or it will not be by a significant amount but only £10 million or £20 million so that it will not do anything about it? Will the Scottish parliament have absolutely no say and no one to appeal to? Will there be no one to adjudicate on any dispute between the Scottish parliament and the Treasury? Perhaps the judiciary will be called into play to resolve any dispute in relation to such matters. Is it just the Treasury which is to make those decisions?

It is dangerous to leave the Bill in that way because I can see that in the future the Treasury may decide, "Given the bother that we shall have to go to to raise another £30 million or £40 million, we do not think that is significant so we shall not try". Anybody who has had dealings with the Treasury knows that when the Treasury digs in its heels, its heels get dug in fairly deeply. It is not right that we should leave the matter just to the Treasury.

Amendment No. 286ZC takes out what seem to me to be unnecessary words. If they are not unnecessary, they certainly put the Treasury in the driving seat to a far greater extent than I believe should be done. We are entering a phase where we will have another parliament and government in the United Kingdom quite separate and distinct from the United Kingdom one. Indeed, during the Recess I heard the Secretary of State for

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Scotland actually using the word "independent". I felt it was a dangerous word to use because it has other meanings; but on certain issues, to all intents and purposes it will be an independent parliament.

It is an important matter of finance. If the parliament decides to use these tax raising powers, we should not be put in a position where the Treasury remains entirely in the driving seat when it comes to disputes surrounding the implementation of any part of Clause 72.

I hope that the noble Baroness who is to reply will be able to reassure me and explain what the words mean that I desire to be removed from the Bill. I hope that she can persuade me that they should remain in the Bill; that they have meaning and substance. If not, I suggest that she agrees with my amendment and we remove the unnecessary words. I beg to move.

Baroness Ramsay of Cartvale: I understand and appreciate the motivation behind these amendments now that they have been explained to me by the noble Lord, Lord Mackay of Ardbrecknish. I understand also some of his doubts and the reason he moved this probing amendment. I hope to be able to explain exactly what is behind the point of his concern.

When any change is proposed in income tax provision, Clause 72 requires that the Treasury judge its likely effect on the Scottish parliament's tax-varying power. Where it believes the effect will be significant under Clause 72 the Treasury must make proposals-- I emphasise that word--for a replacement tax power.

I have no difficulty with the proposed Treasury role in such circumstances. It is the Treasury (and no one else) who will know in advance the big picture on any major UK tax changes that could affect the Scottish tax power and as guardian of the UK tax system (of which the Scottish power will be a part) it is appropriate that it should be charged with making proposals for any changes. But its role will be limited to one of proposal. It will ultimately be for the UK Parliament to decide upon those proposals. There is of course nothing to prevent the Scottish parliament arguing the case for change with the Treasury at any time.

But the key purpose of these provisions is to ensure that the Scottish dimension is taken fully into account when major UK tax changes are in prospect and that things are put in motion quickly to ensure that appropriate changes are made.

The noble Lord, Lord Mackay of Ardbrecknish, asked specifically what is meant by the words,

    "without having been so made or published".
I am advised that the reason those words were inserted was to deal with a situation, for example, when an Opposition amendment may be proposed to the Finance Bill when it would not have been "so made or published". I understand that has happened in the past.

The other point I make is that, in some circumstances, time could be of the essence; for example, when a revised tax power is to be available for the Scottish parliament in time for a new tax year following UK tax

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changes. In that regard the Treasury role could be vital in arranging things quickly.

I hope those explanations go some way to explain why the provisions are phrased as they are and that I have gone some way to answer the noble Lord's points and queries. If so, I trust that he will withdraw his amendment.

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