Labour plans to give Holyrood more tax powers

Scottish Labour is set to call for car tax and airport passenger duty to be devolved at its conference next month.

It is understood Scottish leader Johann Lamont also wants to press ahead with plans to hand Holyrood powers over setting and levying income tax, despite a growing split on the issue.

The party is banking on quelling any internal opposition by applying a set of key tests before any further tax raising powers are devolved.

A further proposal to devolve inheritance tax has been dumped because most of the cash raised from the charge comes from the South East of England.

Lamont received a stormy reception when she set out her proposals to her MPs in London recently. MPs fear their influence will be reduced if Scotland raises more of its own money.

The proposal to devolve airport passenger duty will be controversial. It’s believed Lamont was made aware that it would enrage Labour MPs in the north of England, who fear their local airports would suffer if Scotland had a lower rate of tax.

MPs have been briefing against Lamont and the proposals being drawn up by the devolution commission she chairs. Some have threatened to boycott next month’s party conference rather than be seen to endorse the plans.

Last week MSP Ken Macintosh, who was backed in the 2011 leadership contest in Scotland by MP Jim Murphy, warned against devolving income tax for fear of “independence by default.”