Scenes from September 2014 ahead of the Scottish independence vote
LONDON — A new range of powers have been recommended in Edinburgh Thursday, to give Scotland more control over key things like taxes and the voting age.
The recommendations have been made in a report by the Smith Commission, which was set up following a "No" vote in the Scottish independence referendum in September. Headed by Lord Smith of Kelvin, the Commission involved Scotland's five political parties.
The UK government has committed to delivering draft legislation to give effect to the recommendations by January 2015.
Here are five of the key new powers:
1. Income Tax
The Scottish parliament will be given the power to set income tax rates and bands on income earned. It will receive all income tax that is paid by Scottish taxpayers. However, the UK parliament will keep the powers of taxation over income from savings and dividends. Income tax will still be collected and administered by HMRC.
There will be no restrictions on the thresholds or rates the Scottish Parliament can set, however all other aspects of income tax will remain with the UK parliament, including introductions of annual charges to income tax, personal allowances or the ability to introduce or amend tax reliefs.
The annual block grant, the sum of money granted by the UK government to the Scottish parliament, will be adjusted to take account of these changes.
The Scottish government will have control over the first 10 percentage points of VAT raised at the current standard rate in Scotland. A standard rate of 20% is levied on most goods and services in the UK. The report proposes that the block grant given to Scotland will be reduced to account for this new transfer.
All other aspects of VAT, including the setting of VAT rates, will remain with the UK Government.
Taxes such as the corporate tax rate, the tax on oil and gas receipts, and inheritance tax and capital gains tax remain as is with the UK Government.
3. Air Passenger Duty
The power to charge tax on air passengers leaving through Scottish airports will be devolved to the Scottish parliament. The Scottish government can make its own decisions on what a tax replacing it would look like and how that tax would be collected. However the Scottish government must pay the UK government back for any costs incurred by "switching off" the Air Passenger Duty in Scotland.
4. Lowered voting age
The Scottish parliament will have the power to extend the vote to 16 and 17 year olds, which will allow them to cast their ballots in the 2016 Scottish elections.
5. Creation of new benefits
The Scottish parliament is being given powers over the setting of, structure and value of some benefits outside the group of core benefits such as Jobseekers Allowance and others covered under Universal Credit.
The benefits they will have control over include: Attendance Allowance, Carer’s Allowance, Disability Living Allowance, Personal Independence Payment, Industrial Injuries Disablement Allowance, Severe Disablement Allowance, Cold Weather Payment, Funeral Payment, Sure Start Maternity Grant, Winter Fuel Payment and Discretionary Housing Payments.
The report also recommends giving the parliament powers over new benefits or services that might replace existing ones.
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