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At present there are two sources of revenue under the control of the Scottish Parliament: local taxes (council tax and business rates), in respect of its responsibilities for local government, and the power to impose a ‘Scottish Variable Rate’ (SVR) of income tax: that is, amending the basic rate of tax by up to 3p in the £.

The Scotland Act 2012 devolved three further powers: the power to set a Scottish rate of income tax (SRIT) from April 2016, and to introduce taxes on land transactions and on waste disposal from landfill, replacing the existing UK-wide taxes Stamp Duty Land Tax and Landfill Tax from April 2015. The Act also provides powers for new taxes to be created in Scotland and for additional taxes to be devolved, subject to certain criteria.

While the receipts from the SRIT are to accrue to the Scottish Government, HM Revenue & Customs will continue to be responsible for assessing and collecting income tax across the UK. In February 2013 the Scottish Government and HMRC agreed a memorandum on their respective responsibilities in establishing and operating the Scottish Rate.

The Scottish Government has introduced legislation to establish a new Land and Buildings Transactions Tax, and a Scottish Landfill Tax, from April 2015. Operational responsibility for collecting these taxes will be given to Registers of Scotland, and, the Scottish Environment Protection Agency, respectively. The Scottish Government has also introduced legislation to establish Revenue Scotland – the tax authority responsible for the administration of all devolved taxes. To date the process introduced under the Act for the UK and Scottish Governments to create new devolved taxes has not been used.

This note looks at the debates over devolving tax powers in the context of the passage of the Scotland Bill, and the introduction of the tax provisions in the 2012 Act.

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