Committee (4th Day)

Part of Scotland Bill – in the House of Lords at 3:45 pm on 15th March 2012.

Alert me about debates like this

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Conservative 3:45 pm, 15th March 2012

Further to that point, this is a circular argument. My amendment chose to alter the provisions in the Bill because the test of close connection does not deal with the circumstances that the noble Lord just mentioned. On my reading of new Section 80E, which defines close connection,

"where T has 2 or more places of residence", a soldier may have one residence in the family home in Northern Ireland and the other may be barrack accommodation in Edinburgh or some other part of Scotland. As I understand it-the Minister can tell me if I am wrong-under that definition the soldier would be liable to pay Scottish income tax. That is clearly and absolutely not fair. He might be in Afghanistan or Scotland. No one expects him to pay Afghan tax.

I tabled my amendment to suggest a possible remedy, although it may not be ideal-perhaps my noble friend can comment further. I may be wrong but my recollection is that during consideration of this matter in the other place Ministers said that they would come forward with a view. My noble friend seems to be saying, "Well actually, soldiers are the same as everyone else". They clearly are not the same as everyone else, and are not in the same position as someone who works for the Royal Bank of Scotland who gets posted from London to Edinburgh. I do not want to prolong the debate by talking about the military covenant and so on, but these service men and women are paid very poorly for the job they do, and therefore the burden of increased taxation could be significant.

What my noble friend said was very welcome if it was that where such soldiers are caught by Scottish taxation they will be compensated by having their gross salary increased so that their net position remains the same. That would be fantastic, but can we have that as an undertaking from the Government and perhaps have it written into the Bill at a later stage? Perhaps my noble friend will come forward with an amendment to achieve that purpose. Could we then also work out a system similar to the transfer payment that we mentioned when we talked about the impact of a higher tax rate on welfare payments that would be made in Scotland? Such a system would involve a transfer payment from the MoD budget to compensate for the increased revenue that was being raised from tax in Scotland. The MoD therefore would need to be compensated for that by a reduction in the Scottish block grant.