It is a finnicky detail, but an important one. Today, Kezia Dugdale has announced that Scottish Labour wants to increase income tax by 1 pence in the pound across all tax bands. Under the scheme, anyone earning over £10,600 or so will find themselves making a greater contribution to the Scottish exchequer. Wealthier folk considerably more.





From a legal point of view, this is entirely in order. Under the Scotland Act 2012, Holyrood sets a single Scottish rate of income tax to be paid by Scottish income taxpayers. So how does it work? Under the 2012 Act, you take the UK tax bands determined by Westminster and knock 10% off them. Holyrood has the discretion to add a single supplementary Scottish rate over and above this, which applies to all bandings. To add 11% to the upper rate of income tax, MSPs have got to add 11% to the basic rate too.





only the upper rates of taxation. But importantly, the Scottish Parliament also cannot introduce additional forms of tax relief into the code, or add permissible deductions or provision for rebates to the HMRC rules, even for Scottish taxpayers. Nothing in the Notice a few important things which the 2012 Act doesn't let MSPs do. They've no control over (a) the extent of the tax free personal allowance (b) the number of tax bands in operation (c) when these bands kick in and (d) obviously cannot - at present - increasethe upper rates of taxation. But importantly, the Scottish Parliament also cannot introduce additional forms of tax relief into the code, or add permissible deductions or provision for rebates to the HMRC rules, even for Scottish taxpayers. Nothing in the Scotland Bill , before Westminster, will change any of this. For the moment, all MSPs can do is move the overall income tax slider up or down.





more interested in This is why I'minterested in Scottish Labour 's attempt to sweeten the bitter pill of making even those on very modest incomes pay more tax, by promising the following:





“We would establish, with local authorities, a £100 annual payment to the boost the income of low paid taxpayers. This will account for just £50 million of the half a billion pounds this change will raise but will mean that we can boost the incomes of low paid taxpayers.”





Guardian and Daily Mail characterise these payments as Daily Record calls it Holyrood magazine characterise the proposal as a Labour are defining a "low paid taxpayer" as "taxpayers" earning less than £20,000 a year. They suggest "one in five tax payers will end up better off financially" for the modest expenditure of £50,000,000 a year. Theandcharacterise these payments as "rebates" for the low paid. Thecalls it "cashback." Kevin Hague calls it a "refund" , though Kevin rightly stresses that "the precise mechanics of how this would work are unclear". The BBC andmagazine characterise the proposal as a "payment," but offer nothing more by way of detail than Labour's press release summary.





So what might the legal mechanics of this critical element of Kezia Dugdale's platform be? Let's be clear about a few things from the get-go. Firstly, and as-per-ruddy-usual, the Scotland Act doesn't provide a straightforward legal mechanism to realise Scottish Labour's ambitions. Holyrood has no authority to order HMRC to fork over a £100 repayment to those earning less than £20,000 gross salary per annum. This is so, even if the Scottish Government is good for the money it would cost and willing to pay the funds. This will remain so, even after the Scotland Bill comes into effect.





Holyrood has no legislative competence to introduce such a scheme, as "taxes and excise duties" remain - broadly - reserved. So this is no "rebate", no "tax refund". And critically, it couldn't be administered through the tax system, with all of its convenient access to the financial information of hundreds of thousands of Scots.





Although is - doubtless - convenient political shorthand for Dugdale to link the two, what the Labour leader is proposing here is an entitlement scheme quite distinct from Holyrood's decision-making on the Scottish rate of income tax. Such a payment seems to fall within the - generally reserved - domain of social security. This is defined as "schemes supported from central or local funds which provide assistance for social security purposes to or in respect of individuals by way of benefits,"





“Benefits” here is defined as including "pensions, allowances, grants, loans and any other form of financial assistance." And providing assistance for social security includes "providing assistance to or in respect of individuals ... who qualify by reason of low income." Although Scottish Labour want to dress this up as a rebate or a refund -- it bears all the hallmarks of a social security benefit. If the Scotland Bill passes and comes into force, section 26 should lend Kezia a hand, but until that day, it isn't clear how Dugdale can bring her £100 payments about. The timelines for realising these powers may, or may not, neatly splice with the tax hike she is proposing.





And because this isn't a tax repayment, there are obvious wider practical implications worth considering. Labour indicate that local authorities will shoulder the burdens of adminstering this policy (so no universal credit supplement, this). So how is it envisaged local authorities will collect the relevant financial data on potential beneficiaries? A "rebate" might suggest a convenient calculation, completed automatically by the taxman's computer, which coughs the cash directly into your bank account. But local authorities don't have this data. Will the low paid be expected to take the initiative to make some kind of local government tax return to establish their eligibility?





And thinking of that, have administrative costs been factored into Scottish Labour's £50 million estimated costing for this policy, or is this simply an estimate of the total cash which those earning under £20,000 will be entitled to? If these figures don't include administrative costs, why not? And if they do include administrative costs, what data are these calculations based on? What assumptions have been made about the number of individuals eligibile? What's the breakdown?





One reason why you might struggle to tell me that is that you're still a little fuzzy on who will, and who won't be, entitled to this £100 benefit. In which case, that £50 million estimate looks even shooglier. HMRC estimates that around 2.56 million Scots pay some income tax , the overwhelming majority at the basic rate. Are those earning less than the personal allowance (£10,600 in 2015/16) being classified as "taxpayers" in this scheme, entitled to an annual £100 supplement, along with those who earn £15,000? Pensioners, students, weans? Or will only those who cross the threshold of the personal allowance see the supplementary £100? But even if we're only talking about these taxpayers, making 512,000 people wealthier while taxing them more might seem a difficult circle cheaply to square.





Not insuperable hurdles, then. But questions, questions.



