Scotland to be granted income tax autonomy after voting to remain in UK

A file picture taken on Sept 16, 2014, shows Scottish Saltire flags flying above the River Tweed in the town of Coldstream on the border between England and Scotland. -- PHOTO: AFP
A file picture taken on Sept 16, 2014, shows Scottish Saltire flags flying above the River Tweed in the town of Coldstream on the border between England and Scotland. -- PHOTO: AFP

LONDON (AFP) - Scotland is set to get sweeping new powers including setting its own income tax rates, under plans unveiled Thursday by a cross-party commission on greater devolution.

"The recommendations in the agreement will result in the biggest transfer of powers to the Scottish parliament since its establishment," Lord Robert Smith, who chaired the commission, said in Edinburgh.

"The parliament will be more powerful, more accountable and more autonomous," he said, referring to the assembly set up in 1999 as part of the last major devolution campaign in Britain.

The commission was set up following a last-ditch promise made by the leaders of Britain's unionist three main political parties to grant Scotland greater autonomy if it voted "No" in the September independence referendum.

Other proposals include control over air passenger duty, some welfare payments and part of national sales tax, as well as the right for 16- and 17-year-olds to vote in Scottish elections, below the national threshold of 18.

Decisions on corporation tax will stay on a national level.

British Prime Minister David Cameron said he was "delighted" with the proposals.

"This is a good day for the UK... We are keeping our promise to the Scottish people," the Conservative leader said.

He also pledged to put forward a plan by Christmas to grant greater devolution to England - a key demand from supporters in England who resent the powers being given to Scotland.

"The report today also makes the case for English votes for English laws unanswerable," he said.

Draft laws for greater Scottish devolution are to be drawn up by Jan 25.

The British government has come under pressure to deliver on its promise after a close-run victory for those who wanted Scotland to remain in the United Kingdom.

Scots voted by 55 per cent to 45 per cent to stay within the UK.

Scotland's devolved government is run by the pro-independence Scottish National Party (SNP), whose ranks have swelled since the referendum.

Scottish First Minister Nicola Sturgeon said the proposals were "not real home rule".

"I welcome all new powers - and pay tribute to Lord Smith - but 70 per cent of our taxes and 85 per cent of welfare (are) staying at Westminster," the SNP leader said.

Deputy First Minister John Swinney lamented that it did not include several measures the SNP wanted, but welcomed the outcome "as far as it goes".

The right to full control over income rax rates was backed by Conservatives and the SNP but the opposition Labour Party long resisted the change.

Former Scottish Labour opposition leader Iain Gray, who sat on the commission, called the proposals "real change".

"These are real powers and they will make our parliament one of the most powerful devolved parliaments in the world," he said.

Chairman Smith said he accepted that some would think his recommendations had gone too far, while others would say they had not gone far enough.

"This process was always going to be difficult. It demanded a compromise from everyone involved," he said.

But he also cautioned on the time needed to implement reforms, saying: "Change of this magnitude cannot be rushed through."

Thursday's report is the result of more than a month of talks with representatives of the Scottish Parliament's five political parties and also took into account 400 submissions from organisations and more than 18,000 contributions from the general public.

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