Analysis of Jackson Carlaw’s income tax proposals

Earlier this week, Scottish Conservatives leadership candidate Jackson Carlaw committed to close the income tax gap between Scotland and rUK for those earning between £27,000 and £45,000.

The majority of individuals with income in this range (those with incomes less than £43,430) currently face annual income tax liabilities of up to £150 higher than equivalent counterparts in rUK. But this difference increases rapidly beyond £43,430, reaching £500 at incomes of £45,000 (Chart 1).Continue reading

January 17, 2020

A referendum in 2020?

The First Minister continues to push for a second independence referendum ‘before the end of 2020’.

There are of course a number of political hurdles to cross before this could happen. And these will no doubt dominate debates in the press and social media.

But will the Scottish Government be ready to present the economic case in 2020?

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January 9, 2020

The timing of the Scottish budget 2020/21: implications, uncertainties and risks

So now we know: the UK Budget will be presented on 11 March, having been postponed from its original date of 6 November.

What are the implications for the Scottish budget?

It seems now inevitable that the Scottish budget will have to be published in some form before 11 March.

One option is to seek to finalise all elements of the budget before the UK budget. An alternative, (with the agreement of Parliament) would be to push some final elements of the legislative process back to the second half of March, potentially allowing for last minute adjustments.

Either scenario is undoubtedly sub-optimal for the Scottish Government, Parliament, and a range of other organisations, from local authorities to Revenue Scotland.

But the idea that the Scottish budget can be delayed in full until mid to late March seems unrealistic.

Publishing a Scottish budget before the UK budget does carry uncertainties and risks, however. But what options are open to the Scottish Government to try to mitigate these challenges?Continue reading

January 8, 2020

New GDP data published today

New GDP published today for Q3 2019 shows, as was expected, that the Scottish economy returned to growth in Q3 after a contraction in Q2. We discussed this upcoming data in our Commentary released yesterday.

The economy grew by 0.3% over the 3 months to September, and by 0.7% compared to the same quarter last year.

On this basis, growth in Scotland is on track to come in at around 1% in 2019 (or even lower). This marks another year of disappointing performance for the Scottish economy.

This blog covers some of the key points from the release – but it’s nice and short as we’re off for our Christmas lunch! :-)

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December 18, 2019

FAI Commentary: The outlook for the Scottish Budget 2020/21

This blog post contains the policy context chapter of our economic commentary, published today. The latest economic commentary can be found here.

Budget 2020/21 will be the fourth of five to be set in this parliament. Normally of course it would have been published by now – the Scottish Government initially planned to publish it on 12 December – and the process of scrutiny and debate on the proposals contained within it would have begun.

It was inevitable that the announcement of a UK General Election on 12 December resulted in the postponement of the Scottish budget. The outlook for the Scottish budget – and the viability and outcomes of tax and spending policies – is heavily dependent on UK Government policy decisions.

A Scottish budget published in advance of knowing the complexion of the UK Government would have had to be underpinned by a range of caveats and uncertainties, and could have been subject to substantial revision once the UK Government’s plans became known with greater certainty.

The fact that the General Election result last week was so decisive has in a blink lifted much of the uncertainty that it existed, at least in the short run (i.e. for 2020/21).Continue reading

December 17, 2019