|Editorial commentary; Yet more evidence of ‘dodgy’ financial foundation on an Independent Scotland|
While the full impact of the SNP’s income tax rises in Scotland may not have yet completely ‘worked through the system’ yet, two rather contradictory press releases do not seem to bode well for an independent Scotland being able to ‘balance its books’
The first PR claimed that; ‘Official statistics published by HMRC show that income tax revenues grew by 1.8%, to £10.9 billion in 2017-18, with growth driven primarily by an increase in contributions from higher and additional rate taxpayers - those earning above £43,000 in Scotland in 2017-18’.
The second PR pointed out that; The Scottish Government raised £941m less than expected in devolved income taxes in 2017/18, new figures from HMRC revealed yesterday. Scotland’s economy grew more slowly than the rest of the UK, hitting tax receipts and leaving the Scottish Government with a shortfall in funding.
Because of the risk sharing mechanism in the jointly agreed fiscal framework, the shortfall will be offset by a £737m increase to the block grant funded by the UK Government. It means the Scottish Government will have to manage a reduction in funding in 2020/21 of £204m. Scottish ministers are responsible for deciding how to respond. They have powers to borrow up to £1.75bn and a £700m reserve to smooth funding pressures across financial years.
Alongside this, public spending statistics published last week show spending in Scotland rose to £10,881 per head in 2017/18 from £10,606 the previous year. This compares to the UK average in 2017/18 of £9,350 per head’.One wonders how an independent Scotland (without the support of the fiscal framework, Barnett formula and other UK subsidies – including those replacing EU ones) will be able to balance its books, without Bns in spending cuts?