TaxPersonal TaxScottish tax powers may be illegal

Scottish tax powers may be illegal

A member of the Welsh nationalist Plaid Cymru has claimed the Scotland Act, which allows the Scottish parliament to vary the income tax rate, is illegal under a European Commission ruling.

Madoc Batcup, a prospective candidate for the House of Commons, has argued the European Union would consider the power of Scottish ministers to change the tax rate by as much as 2p in the pound, a breach of European Law.

Batcup believes the EU considers any tax difference within states a distortion of competition.

He has based his claims on an incident when the Italian government asked the EU if it could lower the tax rate in one of its poorest regions. It was advised that this would be in breach of the Treaties of European Law, and that it was illegal to cut corporation tax in one province as it could have a knock-on effect on other regions.

Political party Plaid Cymru, of which Batcup is a member, is concerned about the legality of the tax legislation as it wants to see a cut in corporation tax in Wales, according to PA News.

It believes this will help Welsh business fight off competition from Ireland, which has cut the company tax rate to encourage inward investment and local start-up firms.

Labour has pledged not to use this power in the first term of parliament.

Links

Welsh national party

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