Is Scotland the highest taxed part of the UK?

In recent weeks, there has been considerable debate over the government’s decision to freeze the income tax threshold at which taxpayers start to pay the 40% higher rate in Scotland.

This has led the Conservatives to argue that Scotland is now the highest taxed part of the UK.

This blog discusses some of the key issues underpinning this argument and some important questions around interpretation.

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The NDRI pool…

As the Scottish Budget for 2017/18 has passed through Parliament, the operation of the Non-Domestic Rates pool has risen to prominence. It has provided the Cabinet Secretary for Finance with flexibility to support local government spending and ease the burden of the revaluation to business rates.

So how does the NDRI pool work and what could be the implications over the medium term in the light of the additional cash taken from it to get the budget passed this year? Continue reading “The NDRI pool…”

Boosting the Scottish Government’s Budget?

Yesterday, the Scottish Government announced a ‘Budget boost for economy and public services’. This included an additional £220 million of spending on top of plans set out December’s Draft Budget.

Details on the various sources of this ‘new money’ are as yet unclear and clearly there will be ongoing debates about whether or not it is too much or too little. But setting the political choices aside, yesterday’s announcement was interesting in its own right. It also raises some questions about the transparency of the budget process. This blog poses some issues that might help enlighten the debate as the Budget Bill continues its progress through Parliament.

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6 reforms for the Scottish Budget Process

As the various Committees begin to finalise their detailed scrutiny of the Draft Scottish Budget, we thought that we’d take the opportunity to reflect upon the process itself.

In the light of the Parliament’s new powers, a Budget Review Group has been established “to carry out a fundamental review of the Scottish Parliament’s budget process following the devolution of further powers in the Scotland Act 2012 and Scotland Act 2016”. The Group will report in the spring.

This blog offers some thoughts on possible reforms –

  1. A return to multi-year budgeting
  2. A change to the timing of the Scottish Budget so that it follows the new UK Autumn Budget but with increased time for parliamentary scrutiny earlier in the year
  3. A radical reworking of the structure and approach of the budget document itself
  4. A change of emphasis from reporting changes in portfolio spend to a focus more on outcomes
  5. More information presented on long-term commitments, constraints and liabilities
  6. A more transparent presentation of the new fiscal framework

Continue reading “6 reforms for the Scottish Budget Process”

Has the Scottish budget increased or decreased since 2010/11?

The Finance Committee meeting last Wednesday included a lively exchange about the extent to which the Scottish Government’s budget has changed since 2010/11.

Murdo Fraser argued that the Scottish budget has increased in real terms between 2010/11 and 2017/18. Cabinet Secretary for Finance Derek Mackay replied that there had been a real terms reduction in the Government’s discretionary spending.

Pointing to Annex G of the Draft Budget (which shows an increase from £34.2bn to £37bn), Mr. Fraser then asked whether Mr. Mackay had ‘got his sums wrong’. Mr. Mackay reiterated that there had been a real terms reduction in the government’s spending power of 9.2% over the period.

How can two such contrasting views be arrived at? Here we aim to shed some light on this debate. Continue reading “Has the Scottish budget increased or decreased since 2010/11?”