Clause
99(1) : Power to treat individuals as Scottish taxpayers for social
security purposes
Clause 99(2): Power to determine the basic
rate of tax for social security purposes
Power
Clause 99 provides 2 order-making powers
to enable the Secretary of State (for Social Security) to take
account of the implications of varied Scottish rates of income
tax for social security, child support, pension and war pension
purposes. They allow her - for those purposes - to determine whether
a person is or is not to be treated as a Scottish taxpayer, and
to specify what shall be treated as the Scottish rate of tax in
any year of assessment.
The intention of the provisions is to ensure
that benefit decisions can be made promptly without uncertainty
over the appropriate tax rate to apply, where tax is relevant
to benefit entitlement. In the great majority of cases, the powers
proposed will have no effect on benefit entitlement. They will
reduce administrative costs which would otherwise arise, and prevent
inconvenience to claimants both in Scotland and in the rest of
the UK.
This power is necessary because of the provisions
in Part IV of the Bill which enable the Scottish Parliament to
vary the basic rate of income tax in respect of Scottish taxpayers,
and in some circumstances to do so after the start of the tax
year. It ensures that the Parliament's exercise of its powers
can be accommodated without disruption to the (reserved) social
security, child support and pension systems.
The order-making powers are applicable for all
reserved matters under Head 6 of Schedule 5, although it is expected
that their main use will be in relation to social security benefits
and child support.
Entitlement to many social security benefits,
including the main income-related benefits of Jobseeker's Allowance,
Income Support, Family Credit and Housing/Council Tax Benefit,
is assessed on income net of tax and National Insurance contributions.
Where the Scottish Parliament exercises its power to vary the
basic rate of income tax, it is necessary to determine whether
a benefit claimant should be treated as a Scottish taxpayer in
order to pay the right amount of benefit. The criteria set out
in clause 71 to decide whether or not a person is a Scottish taxpayer
are (like other tax matters) designed to apply over a full year.
But in order to make a clear decision for benefit purposes, it
is necessary to know whether a person is a Scottish taxpayer or
not at the point of claim.
Clause 70 provides, in certain circumstances,
for changes in the Scottish rate of tax at short notice and after
the start of the tax year. It would present operational difficulties
for the social security system to reflect changes at very short
notice, and could mean that large numbers of benefit claims decided
before a tax change might need to be re-examined.
The clause provides powers to put the benefit
position beyond doubt in both these cases, by specifying who is
regarded as a Scottish taxpayer for benefit purposes and what
the relevant rate of tax should be.
Under clause 101(6), these orders may modify
any enactment (except Schedule 5), prerogative instrument or other
document.
Procedure
Orders will be made by statutory instrument.
Under the provisions of clauses 102(1) and (4), orders under clause
99(1) are to be subject to affirmative resolution procedure in
the Westminster Parliament. Under the provisions of clause 102(6),
orders under clause 99(2) are to be subject to negative resolution
procedure in the Westminster Parliament. None of the orders are
subject to any procedure in the Scottish Parliament.
