The Scottish Parliament will be devolved powers over income tax and will be able to carry out new policies to strengthen the welfare state. These are two of the highlights of the agreement reached by the five Scottish Parliament parties within the Smith Commission.

At the request of UK Prime Minister David Cameron, the Smith Commission was set up immediately after the September 18th referendum, in which 55% of voters rejected independence. Two delegates from each of the five parties -SNP, Conservative, Labour, Liberal Democrats and Greens- have spent two months to reach an agreement that was unveiled this morning.

Head of Commission Lord Smith of Kelvin argues the deal "will result in the biggest transfer of power to the Scottish Parliament since its establishment" in 1999. The document is based on the need to reflect "the sovereign right of the people of Scotland to determine the form of government best suited to their needs."

The Smith Commission agreement is the foundation on which the UK Parliament must approve related laws to bring it into practice. Cameron wants the draft bill to be ready in January 2015. Final approval will be delayed until after the next UK election takes place in May 2015.

Devolution of income tax

Overall control over the income tax will be shared between the UK and Scottish governments. The UK tax agency (HMRC) will continue to collect the tax. The UK government will then transfer it to the Scottish government in full, except for savings and dividend incomes.

The Scottish Government will also be devolved the power to charge tax on air passengers leaving Scottish airportst, and will receive too a part of the VAT. Pensions will remain a UK exclusive power.

Scottish institutions are also set to be devolved responsibility for a number of social benefits. This was one of the SNP's arguments for independence during the referendum campaign: Scotland, the party said, would be able to maintain a stronger welfare state if independent. Powers to be devolved to the Scottish Parliament include benefits for the disabled, carers, ill people and funerals. Scotland will also be able to create new benefits.

Scottish institutions to be recognized "permanent"

In addition, changes in UK legislation will be introduced in order to state that the Parliament and the government of Scotland are "permanent institutions." The Parliament will receive the powers to organize Scottish and local elections. This will open the door to changes such as the introduction of voting rights for 16- and 17-year-olds.

Foreign policy will remain a UK reserved power. But the agreement states that the UK government will need to "fully involve" Scottish ministers when issues concerning Scottish powers are debated at the EU level.

Licensing offshore oil and gas extraction will remain a UK power, while onshore extraction powers will be devolved to Scotland. Most of Scotland's oil is offshore.

Scottish government believes deal is insufficient

The SNP-led Scottish government welcomed the transfer of new powers, but pointed out that the agreement falls well below the expectations of the people of Scotland. First Minister Nicola Sturgeon insisted London will continue to control 70% of Scotland's taxes and 85% of Scotland's welfare:

I welcome all new powers - and pay tribute to Lord Smith - but 70% of our taxes and 85% of welfare staying at Westminster not real home rule

— Nicola Sturgeon (@NicolaSturgeon) November 27, 2014

Deputy First Minister John Swinney recalled that two-thirds of Scots -according to opinion polls- want Scotland to independently handle all matters except for defense and foreign policy. Swinney announced that the SNP will propose "improvements" to the agreement and will seek a democratic mandate to promote them during the next UK election campaign.

Vote expectations for the SNP are excellent right now: surveys say the pro-independence party could receive some 45% of Scotland's votes next May. According to a November opinion poll, the SNP could get 52 MPs in Westminster -the party has now 6-, which would allow it to become the third strongest party in the UK Parliament, only behind the Conservatives and Labour.