SECTION 75: Scottish taxpayers

Purpose and Effect

This section defines the term "Scottish taxpayer" for the purposes of the provisions in the Act concerned with the Scottish Parliament's tax-varying power.

General

The section forms part of the set dealing with the tax-varying power of the Scottish Parliament.

Section 73 allows the Scottish Parliament to pass a resolution varying the basic rate of income tax for Scottish taxpayers by no more than 3 per cent. Section 74 makes further provisions with respect to tax-varying resolutions, and section 75 defines the term "Scottish taxpayer".

Section 76 makes provision to take account of future changes to the structure of UK income tax. Sections 77 and 78 describe the accounting arrangements where income tax is increased or decreased for Scottish taxpayers. Section 79 permits the Treasury to make consequential subordinate legislation.

Parliamentary Consideration

Details of provisions

Subsection (1) provides that, for any tax year, a Scottish taxpayer is a person who is resident in the UK for income tax purposes where Scotland is the part of the UK with which that person has the closest connection during the year.

Subsection (2) defines "closest connection with Scotland". There are three tests, only one of which need be satisfied. Broadly, a person is a Scottish taxpayer if:

subsection (3) of this section applies to him;

the number of days he spends in Scotland in the tax year equals or exceeds the number of days spent elsewhere in the UK ("day spent" is defined in subsection (4));

he is a Scottish MP, MEP or a member of the Scottish Parliament for the whole or any part of that year.

Subsection (3) sets out the circumstances in which that subsection will apply to an individual for a tax year. These are that the individual spends a part of that tax year in Scotland and, for at least part of that time, his principal UK home is located in Scotland and he makes use of that home as a place of residence. In addition, his principal UK home must be located in Scotland for at least as much of that year as the location of his principal UK home is not in Scotland.

Subsection (4) makes provision as to when a person spends a day in Scotland or spends a day elsewhere in the United Kingdom for the purposes of this section. In particular, a person spends a day in Scotland if, but only if, he is in Scotland at the end of that day. A person spends a day elsewhere in the United Kingdom if, but only if, he is in a part of the United Kingdom which is not Scotland at the end of that day and he does not spend that day in Scotland (i.e. he is not in Scotland at the end of that day).

Subsection (5) explains the circumstances in which a person's principal UK home will be in Scotland. These are that a person has a place of residence in Scotland which is his only or main place of residence in the UK.

Subsection (6) confirms that a "place" may include a place on a vessel or other means of transport.

SECTION 76: Changes to income tax structure

Purpose and Effect

This section sets out circumstances in which the Treasury must consider whether the tax varying power of the Scottish Parliament ought to be amended. It applies where it appears to the Treasury that proposed changes to the UK income tax structure would affect significantly the practical extent for any year of the Scottish Parliament's tax-varying powers. The section requires the Treasury at certain times to indicate to the House of Commons whether an amendment to the Scottish Parliament's tax-varying power is necessary and, if so, to make defined and limited proposals for amending that power.

General

The section forms part of the set dealing with the tax-varying power of the Scottish Parliament.

Section 73 allows the Scottish Parliament to pass a resolution varying the basic rate of income tax for Scottish taxpayers by no more than 3 per cent. Section 74 makes further provisions with respect to tax-varying resolutions, and section 75 defines the term "Scottish taxpayer".

Section 76 makes provision to take account of future changes to the structure of UK income tax. Sections 77 and 78 describe the accounting arrangements where income tax is increased or decreased for Scottish taxpayers. Section 79 permits the Treasury to make consequential subordinate legislation.

Parliamentary Consideration

Details of Provisions

Subsection (1) describes the circumstances in which the section will apply. There must be a proposal, which is either published by the Treasury or the Inland Revenue or which appears to the Treasury to be likely to be enacted, to modify any income tax provision. The proposal must significantly effect the practical extent for any year of the Scottish Parliament's tax varying powers (i.e. the amount of tax which could be raised or foregone by the Scottish Parliament under any tax varying resolution it is allowed to pass under the Act).

Subsection (2) imposes a duty on the Treasury to indicate to the House of Commons as soon as is reasonably practicable whether an amendment of the tax-varying power is required as a consequence of such a proposal; and if they think an amendment is required, to make appropriate proposals for amending that power.

Subsections (3), (4) and (5) impose certain restrictions on the substance of any Treasury proposals for amending the tax-varying power. The proposals must only apply to income tax; they must provide that any amended power is broadly of the same practical extent (i.e. is capable of raising or foregoing broadly the same amount of tax) as the existing power; the proposed revised powers must, if exercised, have broadly the same impact on the after-tax income levels of individual tax payers as the existing powers; and the proposals must not include proposals to enable the Parliament to vary the rate of tax applying to income from savings or distributions.

Subsections (6) and (7) give definitions.

SECTION 77: Accounting for additional Scottish tax

Purpose and Effect

This section applies where the basic rate of income tax is increased for Scottish taxpayers. It requires the Inland Revenue to pay into the Scottish Consolidated Fund (SCF) an amount equal to the estimated yield from the additional tax to be paid by Scottish taxpayers, and requires the Inland Revenue to make and maintain appropriate arrangements to determine the amount and frequency of payments into the SCF.

General

The section forms part of the set dealing with the tax-varying power of the Scottish Parliament.

Section 73 allows the Scottish Parliament to pass a resolution varying the basic rate of income tax for Scottish taxpayers by no more than 3 per cent. Section 74 makes further provisions with respect to tax-varying resolutions, and section 75 defines the term "Scottish taxpayer".

Section 76 makes provision to take account of future changes to the structure of UK income tax. Sections 77 and 78 describe the accounting arrangements where income tax is increased or decreased for Scottish taxpayers. Section 79 permits the Treasury to make consequential subordinate legislation.

Parliamentary Consideration

Details of provisions

Subsection (1) provides that where the basic rate is increased by a resolution of the Scottish Parliament, the Inland Revenue must pay amounts into the Scottish Consolidated Fund (SCF).

Subsection (2) requires the Inland Revenue to determine and notify to the Scottish Ministers the amount to be paid over and the timing of such payments as soon as reasonably practicable after the resolution is passed.

Subsection (3) provides that any determination under subsection (2) above shall ensure that payments into the SCF properly represent the income tax receipts attributable to the resolution.

Subsections (4) and (5) provide for the Inland Revenue to make and maintain, and if necessary adjust, arrangements for estimating the total amount due to be paid into the SCF, and the amount and the frequency of individual payments in accordance with this section.

Subsection (6) requires the Inland Revenue to consult with the Scottish Ministers about those arrangements before making or modifying them.

Subsection (7) defines "income tax receipts" for the purposes of this section.

Subsection (8) provides that payments made under this section by the Inland Revenue shall be paid out of the gross revenues of that Department, and be deducted from the total amount of such revenues before they are paid into the Consolidated Fund.

SECTION 78: Effect of tax reduction for Scottish taxpayers

Purpose and Effect

This section is complementary to section 77, and applies where the basic rate of income tax is decreased for Scottish taxpayers. It requires payments out of the Scottish Consolidated Fund reflecting the shortfall in the yield of income tax resulting from the reduced rate, and provides for these payments to be accounted for to the UK Consolidated Fund.

General

The section forms part of the set dealing with the tax-varying power of the Scottish Parliament.

Section 73 allows the Scottish Parliament to pass a resolution varying the basic rate of income tax for Scottish taxpayers by no more than 3 per cent. Section 74 makes further provisions with respect to tax-varying resolutions, and section 75 defines the term "Scottish taxpayer".

Section 76 makes provision to take account of future changes to the structure of UK income tax. Sections 77 and 78 describe the accounting arrangements where income tax is increased or decreased for Scottish taxpayers. Section 79 permits the Treasury to make consequential subordinate legislation.

Parliamentary Consideration

Details of provisions

Subsection (1) provides that where the basic rate is decreased by a resolution of the Scottish Parliament, payments will be made out of the Scottish Consolidated Fund (SCF) to the Inland Revenue.

Subsection (2) requires the Inland Revenue to determine and notify to the Scottish Ministers the amount to be paid over and the timing of such payments as soon as reasonably practicable after the resolution is passed.

Subsection (3) provides that any determination under subsection (2) above shall ensure that payments out of the SCF properly represent the shortfall in income tax receipts attributable to the resolution.

Subsections (4) and (5) provide for the Inland Revenue to make and maintain, and if necessary adjust, arrangements for estimating the total amount due to be paid over, and the amount and the frequency of individual payments in accordance with this section.

Subsection (6) provides for consultation with the Scottish Ministers about those arrangements before they are made or modified.

Subsection (7) provides that "income tax receipts" for the purposes of this section has the same meaning as it has for section 77.

Subsection (8) provides that payments made under this section to the Inland Revenue shall be treated as part of the gross revenues of that Department and paid into the UK Consolidated Fund accordingly.

SECTION 79: Supplemental powers to modify enactments

Purpose and Effect

This section is supplementary to the provisions of sections 73 and 74. It permits the Treasury by order to modify enactments to take account of the Scottish Parliament's tax-varying power. In particular, such an order may exclude the effect of any tax-varying resolution in relation to certain enactments, or postpone the effect of such a resolution in relation to the operation of the PAYE system. Further provision about the making of subordinate legislation is to be found in sections 112 to 115 and Schedule 7.

General

The section forms part of the set dealing with the tax-varying power of the Scottish Parliament.

Section 73 allows the Scottish Parliament to pass a resolution varying the basic rate of income tax for Scottish taxpayers by no more than 3 per cent. Section 74 makes further provisions with respect to tax-varying resolutions, and section 75 defines the term "Scottish taxpayer".

Section 76 makes provision to take account of future changes to the structure of UK income tax. Sections 77 and 78 describe the accounting arrangements where income tax is increased or decreased for Scottish taxpayers. Section 79 permits the Treasury to make consequential subordinate legislation.

Parliamentary Consideration

Details of provisions

Subsection (1) provides that the Treasury may make an order modifying any enactment as they consider necessary or expedient to take account of the fact that the Scottish Parliament has, is to have, or has exercised its tax-varying power. "Enactment" is defined in section 126(1).

Subsection (2) provides that a Treasury order may exclude the effect of the tax-varying power in relation to certain enactments.

Subsection (3) provides power by order to postpone temporarily the effect of a resolution in relation to the operation of PAYE.

Subsection (4) provides that orders under this section may have limited retrospective effect.

Subsection (5) sets out definitions.

SECTION 80: Reimbursement of expenses

Purpose and Effect

This section gives the Scottish Ministers the power to reimburse Ministers of the Crown or government departments for administrative expenses incurred by virtue of Part IV of the Act (the tax varying power). The existence of this power means that under the terms of section 65 reimbursements can be made out of the Scottish Consolidated Fund.

Parliamentary Consideration

Details of Provisions

Before the Scottish Parliament is to be able to exercise its tax-varying power, certain mechanisms have to have been put in place and maintained. These mechanisms involve certain UK Government Departments (specifically Inland Revenue and DWP) incurring some set-up costs and some continuing maintenance costs. These costs will be incurred whether or not the Scottish Parliament makes use of the tax-varying power. Thus they are not attributable to any exercise by the Scottish Administration of its functions. Without this section these particular expenses could not be met by making payments out of the Scottish Consolidated Fund (because they would not count as "expenditure of the Scottish Administration" in terms of section 65(2)(a)). While these expenses could be met in other ways than payment out of the SCF (particularly through adjustment of the grant paid by the UK Government to the Scottish Administration), it is nevertheless desirable to have the SCF option available. The section achieves this by giving the Scottish Ministers a specific power to reimburse these administrative expenses.

PART V: MISCELLANEOUS AND GENERAL

SECTION 81: Remuneration of members of the Parliament and Executive

Purpose and Effect

This section requires the Parliament to make provision for the payment of salaries to members of the Parliament and members of the Scottish Executive, including junior Scottish Ministers. The amount of any salary is a matter for the Parliament to determine. Under this section the Parliament can also, if it so decides, make provision for the payment of allowances and pensions, gratuities and allowances to MSPs and members of the Scottish Executive. In respect of pensions the Parliament can provide for contributions or payments towards such pensions or for the establishment and administration, whether by the Scottish Parliamentary Corporate Body or otherwise of, a pension scheme or schemes.

Background

This section is one of a series on remuneration. Section 82 deals with limits on salaries of MSPs who are also Members of the UK Parliament or the European Parliament and section 83 requires information as to salaries, allowances, pensions and gratuities paid under this section to be published each year and ensures that a person cannot receive a salary as an MSP or a member of the Scottish Executive unless he has taken the appropriate oath under section 84.

Parliamentary Consideration

Details of Provisions

Subsection (1) places a duty on the Parliament to provide for the payment of salaries to Members of the Parliament and the members of the Scottish Executive including the junior Scottish Ministers.

Subsection (2) allows the Parliament to provide for the payment of allowances to members of the Parliament and members of the Scottish Executive including the junior Scottish Ministers. It is for the Parliament to determine what allowances if any are payable but it could provide, for example, for allowances for the provision of secretarial services etc.

Subsection (3) allows the Parliament to provide for the payment of pensions, gratuities or allowances to or in respect of any person who has ceased to be a member of the Parliament or a member of the Scottish Executive. It is for the Parliament to determine what provision is to be made but it could for example, include provision for payment of a gratuity similar to the resettlement grant paid at Westminster when an MP fails to be re-elected. The subsection also allows the Parliament to provide for a pension etc. to be payable to or in respect of any person who has ceased to hold an appointment in the Parliament or Scottish Executive but who continues to be a member of the Parliament or the Scottish Executive. There is, however, nothing to prevent an MSP contributing to a pension scheme under private arrangements.

Under subsection (4) the provision made by the Parliament under subsection (3) may include in particular provision for contributions or payments towards the provision of pensions, gratuities and allowances. The Parliament may also make arrangements for the establishment and administration of one or more pension schemes. It can do this through the Scottish Parliamentary Corporate Body (SPCB) or by such other means as the Parliament decides.

Subsection (5) provides that "provision" includes provision by an Act of the Scottish Parliament or by a resolution of the Parliament conferring functions on the SPCB. All references in this section to a member of the Scottish Executive include a junior Scottish Minister.

SECTION 82: Limits on salaries of members of the Parliament

Purpose and Effect

This section requires the Scottish Parliament to abate the salary of any member of the Scottish Parliament who also receives a salary as a Member of Parliament or a Member of the European Parliament. The amount by which the salary is abated is a matter for the Parliament.

General

This section is one of a series on remuneration. Section 81 deals with salaries, allowances, gratuities and pensions of MSPs and members of the Scottish Executive and section 83 requires details of salaries, allowances, pensions and gratuities paid under section 81 to be published each year and ensures that a person receiving a salary as an MSP or a member of the Scottish Executive must first have taken the appropriate oath under section 84.

Parliamentary Consideration

Details of Provisions

Subsection (1) places a duty on the Parliament to ensure that the amount of salary payable to a member of the Scottish Parliament under section 81 is reduced if any salary is payable to him as a member of either House of Parliament or as a member of the European Parliament.

Subsection (2) places a duty on the Parliament to ensure that the salary is reduced to a particular proportion of what it would otherwise be or to a particular amount; or by the amount of any salary payable to the member of the Scottish Parliament as a member of Parliament or the European Parliament or by a particular proportion of that amount or by some other particular amount.

SECTION 83: Remuneration: supplementary

Purpose and Effect

This section makes further provision as to the remuneration of members of the Scottish Parliament and members of the Scottish Executive. In particular, it provides for information concerning salaries, allowances, pensions or gratuities paid to them to be published each year. This section also requires members of the Scottish Parliament and members of the Scottish Executive to have taken the appropriate oath before receiving payment of salaries or allowances. This section also allows certain persons to continue to receive remuneration as an MSP after a dissolution of the Parliament in certain specified circumstances.

General

This section is one of a series on remuneration. Section 81 deals with salaries, allowances and pensions etc. of MSPs and members of the Scottish Executive and section 82 deals with limits on the salaries of MSPs who are also Members of Parliament or Members of the European Parliament.

Parliamentary Consideration

Details of Provisions

Subsection (1) places a duty on the Parliament to publish information relating to salaries, allowances, pensions or gratuities paid each financial year. There is no restriction as to the vehicle used by the Parliament to make this information available. This covers the remuneration of members of the Parliament and members of the Scottish Executive.

Subsection (2) provides that no payment of salary or allowances shall be made to a member of the Scottish Parliament or a member of the Scottish Executive who has not taken the appropriate oath, as required by section 84.

Subsection (3) provides that a member's entitlement to a salary or allowance is not affected for the period prior to him taking the oath provided he does duly take the oath. Therefore, if a member delays in taking the oath, he will still be entitled to receive payment in respect of the period after he was elected and before he took the oath but not until he has taken the oath. This should be read in conjunction with section 84(3) which provides that if the oath is not taken within 2 months from the date of being returned as an MSP the seat will become vacant, although that section also provides that the Parliament could extend that period.

Subsection (4) provides for a person who was a member of the Scottish Parliament prior to a dissolution of the Parliament to continue to receive remuneration under section 81 in one of 2 circumstances. These are firstly if he continues to hold office as a member of the Scottish Parliamentary Corporate Body or as Presiding Officer or deputy Presiding Officer, in which case he is treated as an MSP until he ceases to hold office; and secondly, if he is nominated as a candidate at the subsequent election, he is treated as an MSP for the purposes of section 81 until the end of the day of that election.

Subsection (5) allows for different provisions to be made under sections 81 or 82 for different cases. This allows the Parliament to provide for different salaries to be paid to different descriptions of MSPs or members of the Scottish Executive according to any office or position which they may hold in the Parliament or the Scottish Executive. For example it allows the Parliament to make provision for the MSP who holds the office of Presiding Officer to be paid a higher salary.