How does the Scottish Government assess the impact of its budget on tackling Child Poverty?

The Scottish Parliament has adopted statutory targets to substantially reduce rates of child poverty over the period to 2030. But to what extent will the policies set out in the government’s budget for 2019/20 contribute to the achievement of these targets?

The Scottish Government publishes complementary analysis alongside its budget each year that shows how it has taken due regard of its statutory duties to reduce differences in outcomes by protected characteristics and socio-economic disadvantage. The information provided in this Equality Budget Statement (EBS) provides the Scottish Government’s own assessment of how Budget spending will impact on equality and socio-economic outcomes in Scotland.

In this blog, the Joseph Rowntree Foundation and the Fraser of Allander Institute reflect on the insight that the Scottish Government analysis provides with regards to tackling child poverty.Continue reading

January 10, 2019

Scottish Budget Analysis Event

This morning we held an event giving an overview of the Scottish Budget unveiled earlier this week.

The slides from this event are available for download here, and are provided below.

December 14, 2018

Budget 2019/20 – preliminary analysis

Derek MacKay’s third budget of this parliamentary session was doomed to be overshadowed by events at Westminster.

With many people’s attention only partially focussed on events at Holyrood, much Scottish budget commentary will not get beyond an analysis of income tax differentials. Whilst MacKay had heavily hinted in recent weeks that he would not follow the UKG policy to substantially increase the higher rate, he surprised many by freezing the threshold in cash terms. Scottish taxpayers will start paying 41% higher rate at income above £43,430, whilst counterparts in rUK will continue to pay basic rate of 20% up to an income of £50,000.

The Scottish income tax policy is estimated to raise Scottish Government revenues by just over half a £billion compared to what it would raise if it followed rUK tax policy, although the difference in tax liability for individuals is now quite marked, particularly for those with incomes around £50,000.Continue reading

December 12, 2018

Scottish income tax policy 2019/20

This afternoon, Mr Mackay set out the proposed income tax parameters for 2019/20 in the draft Budget.

These are shown in the table at the bottom of this blog, together with last year’s policy and the 2019/20 UK policy.

Mr MacKay said that 99% of Scottish income taxpayers will pay less tax in 2019/20 than they did in 2018/19.

This statement is correct in the sense that, in 2019/20, 99% of taxpayers will benefit from a higher tax-free personal allowance**, (and to a lesser extent the Scottish Government’s increase in the thresholds for the basic and intermediate rates).

What about comparisons with the rest of the UK? Mr Mackay pointed out that 55% of Scottish taxpayers will pay less income tax than rUK taxpayers with equivalent income.

This is true in that the 19% Starter Rate in Scotland means that those with income less than £27,000 (slightly above the Scottish median income) will pay less tax than rUK counterparts.

It is worth bearing in mind however that the difference between Scottish and rUK tax liabilities at this end of the income distribution is small – the maximum benefit to Scottish income taxpayers is just over £20 per year.

Some examples of the difference in liabilities for different salaries are given in the diagram below.

Continue reading

Windfalls, dilemmas and deals: looking ahead to the Scottish budget

Wednesday’s Scottish Budget announcement will almost certainly play second fiddle to Brexit as a news story, and justifiably so given the significance of the UK’s future relationship with the EU.

But the Scottish budget is important too, and not just because it tell us how much income tax and council tax we can expect to pay next year. It also sets the direction of devolved public spending in Scotland, which, when set alongside budgets of previous years, is beginning to tell a story of substantial change in the way in which devolved public spending is distributed across public services.Continue reading

December 10, 2018