The author, fiscal expert at FAI, examines the tax changes designed to achieve greater fairness made in the fifth Scottish Parliament – and the scope for reform and greater powers in the next.
‘Hence a policy framed as supporting ‘middle earners’ predominantly benefits households at the top of the distribution of household income.’
The Scottish Budget was due on December 12, #GE2019 day, but will almost certainly be pulled until after the UK Budget is presented early next year on the back of wild spending promises. Even pre-Brexit the Scottish outlook is more than unusually uncertain…
‘We can hope that any future constitutional debate considers these long-term issues more seriously, preferably in an open and respectful way – although evidence from the annual GERS furore suggests that this may be a little too much to ask for.’
If this happens, the NHS Scotland will see average annual real terms increases of around 3.1% during this parliament (and 4.2% annually over the next three years), more than double the implication of its existing plans, which envisage average annual real terms increases on the NHS over the parliament of around 1.4%.
‘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’.
‘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 allocation of an additional £1bn funding to Northern Ireland over two years represents a particularly large financial settlement to have bypassed Barnett. To secure an equivalent funding increase via the Barnett Formula, the UK Government would have had to increase comparable English spending by £30bn; this in turn would have generated Scottish consequentials of £3bn..’
If the UK economy worsens post-Brexit, Scotland’s budget will be affected. Already, the Chancellor’s decision to abandon his fiscal targets and borrow has knock-on effects we’ll find out about in the autumn. Scotland’s fiscal framework will come under greater strain.
Scottish Vote Leave has claimed that Brexit would bring an extra £1.5bn a year to Scotland’s budget. But the claim is erroneous as a leading economist explains here.