A key aim of the Smith Commission was to improve accountability and make Scotland’s politicians responsible for the money that they spent. Unfortunately rather than helping to deliver this aim, the current proposals for VAT assignment risk undermining that principle.
‘Whilst there is clearly a negotiating advantage in the government holding back some monies as part of their tactics to get the Budget Bill through, one can see MSPs from now on assuming that £100 million is a useful ballpark for the amount the government may have ready to hand to push through a deal’.
‘On balance, the SFC’s GDP forecasts are not out of kilter with the recent past. And the SFC assumes that there will be no ‘bounce-back’ in Scottish growth to recapture weak growth relative to the UK over the past 2.5 years’.
‘While the Scottish government is introducing more progressive taxes, the US is in the process of passing a controversial bill which cuts tax bigly for the rich’. Jackie Kemp, now based in Boston, Mass., saees merits in both systems…
‘Under the Scottish Government’s proposed income tax policy, everyone earning under £33k will pay less tax in 2018/19 than they did this year (2017/18). BUT part of this is due to the increase in Personal Allowance, which would have happened anyway, i.e. irrespective of any announcement made by Mr Mackay today.’
‘… the challenge remains for Derek Mackay as to how best to balance his resource budget with major commitments like additional support for the NHS, more money for childcare and public sector pay uplifts all to be paid for.’
‘The purpose of such devolution would be to ensure that Scotland’s particular demographic challenges, which differ significantly from those elsewhere in the UK, can be met by the public authorities responsible for implementing immigration policy.’
The upcoming budget debate is an important opportunity for policymakers from all sides to set out what they would do, yes on taxation, but also on expenditure and growth. The new income tax powers provide some measure of relief, but it’s far from the only game in town’.
‘Of course, it is possible to close this (budget) gap by explicitly reducing certain expenditures or by assuming higher tax revenues – either through increased rates or faster growth. Others will argue though, that in the context of independence, there may be additional costs. The debates will no doubt continue.’ And indeed they do…
‘Changing the constitutional set-up doesn’t alter the fact that these fiscal challenges need to be addressed by all governments in all countries. Today’s figures show that a more autonomous Scotland will be forced to meet such challenges sooner rather than later.