Labour is expected to endorse proposals made by Gordon Brown yesterday to allow to give the Scottish Parliament much greater power over the level of income tax.
The former Prime Minister outlined a blueprint for a "partnership of equals" between Scotland and the rest of the United Kingdom, saying his plans would transform the "unitary and centralised" system in the UK.
Scotland is already due to get new powers over income tax from April 2016, when the Treasury in London will deduct 10p from standard and upper rates of income tax in Scotland and give MSPs the power to decide how to raise cash.
Speaking in Glasgow, Mr Brown said: “The first 5p of income tax should be decided by the UK Government, the next 15p by the Scottish Government. I believe that is a fair way of raising 40 per cent of the revenue of the Scottish Parliament in Scotland."
The former Labour leader argued that this would make ministers in the Scottish Government "accountable to the people of Scotland for the way that money is spent", adding: "They will have to answer at elections, which they don't have to do at the moment, for tax decisions that they make."
Mr Brown’s six-point plan would also give Holyrood more powers in employment, health, transport and economic regeneration. There would be a "radical" transfer of powers downwards from Westminster and Edinburgh to local communities.
He has submitted his proposals to a Labour commission, which will outline plans to boost devolution in the event of a “No” vote in the referendum on independence in September. His tax proposal is likely to be included in Labour’s manifesto at next year’s general election.
A fierce debate over such “devo max” plans would follow if Scots reject independence. A crunch issue would be whether the necessary legislation would be passed at Westminster. Greater tax powers would open the question of whether Scotland should continue to get more central government funding per head of population than England.
Nicola Sturgeon, the SNP's Deputy Scottish First Minister, said: "There's a pattern here, where the Westminster parties, when they're in a position to deliver more powers, fail to do so. Then, with the threat of a referendum and a 'Yes' vote, they suddenly start to decide that they're in favour of all of this anyway."