Page last updated at 13:06 GMT, Friday, 6 March 2009

Labour leader in tax-varying call

Iain Gray
Iain Gray said the SNP should focus on the economy, not independence

Scottish Labour's leader has suggested that Scotland could have powers to set income tax rates every year.

Iain Gray also argued that devolving borrowing powers to the Scottish Parliament was "desirable".

His comments came in a BBC Scotland webcast at the Scottish Labour conference in Dundee.

Mr Gray also said he could not rule out an independence referendum, but said the economy was a more important issue for the foreseeable future.

The Scottish Labour leader said powers to raise income must come hand-in-hand with the debate over more borrowing powers for Westminster.

He said: "I accept that borrowing powers are desirable for the Scottish Parliament, the Scottish Government, and that they would be useful, particularly for managing capital programmes over a period of years."

Will there have to be a referendum sometime? I never say never
Iain Gray

The Scottish Parliament's powers to vary income tax have never been used, and Mr Gray said an extension of those powers should be looked at.

"I think perhaps we should be required, for example, to actually set the income tax rate, either each year or each comprehensive spending review period or once a parliament, so that if we don't use that power we take a conscious decision not to take it," he said.

"I would be in favour of using the power if it was right to use it.

"If you're asking me in 2011 am I going to suggest we raise income tax, I don't know but I think it's unlikely."

The Scottish Parliament passed an amended motion on Thursday urging the Scottish Government to shelve its plans for an independence referendum and instead concentrate on helping Scotland through the global financial crisis.

Scottish ministers want to bring legislation to Holyrood next year to stage the referendum, but the minority SNP administration currently does not have enough parliamentary support to get it through.

Extra bands

But Mr Gray said he could never rule out a referendum being staged.

He said: "Will there have to be a referendum sometime? If there is pressure for it, then there may well be. I never say never.

"But for the foreseeable future, the next year or two years, I really believe that Scottish politics, indeed British politics and beyond that, have to focus on getting the economy through the next year or two in very difficult circumstances."

Amid the growing consensus to reform council tax, Mr Gray went on to suggest that extra bands could be added.

Scottish Labour has been under pressure to reveal its plans for the tax, after the Scottish Government shelved proposals to replace it with a local income tax, partly because of a lack of support at Holyrood.

Mr Gray said his party's proposals would be fair and workable, but added: "I think it is more important for us to get this right than to get it quickly."

Footballing nation

He said he supported a property-based system of local taxation, adding: "I think we probably are talking about more bands, I think we're talking about looking at the account that is taken, at the moment, of single occupancy or being a pensioner."

Mr Gray, a Hibs fan, also appeared to come out against Prime Minister Gordon Brown's plan for GB football team for the 2012 London Olympics.

The Scotland, Wales and Northern Ireland football bodies have opposed any such move in case it affects their status within governing body Fifa.

"I think the most important thing is that we protect Scotland's position as an independent footballing nation," Mr Gray said.

"If we can do that and still compete in the Olympics, I think that would be a nice thing."

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