Sturgeon could raise taxes to avoid financial ruin as leader pleas Boris for new powers

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Nicola Sturgeon’s Scottish Finance Secretary Kate Forbes said she hasn’t ruled out that she may have to consider tax rises in Scotland. It comes after Ms Forbes wrote to Stephen Barclay, Chief Secretary of the Treasury, seeking temporary changes to funding arrangements.

These include the ability to borrow up to £500 million this year to deal with COVID-19 and flexibility to switch unused capital budget to other spending.

These also include new financial powers from the Treasury.

The calls after the SNP warned there was a £500million hole between the extra cost of the COVID-19 pandemic and the funding given to Scotland from Westminster.

Ms Forbes says these additional means are “critical” recovering from the coronavirus crisis.

She said: “Clearly, this is an enormously challenging time and that is precisely why we either need additional funding from the UK Government.”

Ms Forbes said it was the only way that she could increase the budget.

Alternatively, she stressed the importance of “flexibilities” from the treasury so that they could use the Scottish budget more effectively.

The MSP added: “But the scale of the challenge, whether it’s local government, the health service, the economy right now, means that without additional powers and flexibilities, I am doing this with one hand tied behind my back.

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“So at the moment, proving certainty and stability to the economy is critical, if we’re going to grow the economy and ensure that businesses can reopen and jobs can be saved.

“To be clear, this request is not about permanently revising the existing framework.

“Rather, it is about providing enabling relatively minor flexibilities given the extraordinary pressures that the devolved governments are currently under, to ensure that our fiscal powers are commensurate with the risks we face.

“However, our fixed budget could respond more effectively with some relatively minor fiscal flexibilities.

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“I cannot emphasise how critical these are to our ability to support recovery. “

Of the ability to borrow £500million, the finance secretary requested to the Treasury that the repayment period is doubled to ten years, up from five years.

They also stressed there should be more flexibility on drawing down reserve money with the limit increased to £220million.

The Scottish government’s overall budget for the 2020-21 financial year currently stands at more than £52billion, up from an earlier estimate of £49.25billion.

However, Westminster says they have given the Scottish Government £3.8billion to help through the coronavirus pandemic.

Westminster has also given more than 700,000 Scots help through the Furlough scheme.

Ms Forbes added: “To date, we’ve been very grateful for the finances coming from the UK government but it doesn’t meet the COVID costs, and what we’re asking for is if there isn’t going to be additional funding forthcoming, then we have the tools to manage our budget more effectively.

Adding about taxes, she said: “We can do more around local taxes – but that would have to be in collaboration with local authorities. We will look at everything but I would caution against any knee-jerk reaction.”

The Scottish government have a number of options to set taxes however their current powers are limited to set a national tax under the current devolution settlement.

 

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