£5 billion increase in revenues by 2029
28 May 2014 03:44 PM
Improved economic performance key to boosting tax
revenues.
The Outlook for
Scotland’s Public Finances, published today, demonstrates that Scotland
will start life as an independent country with strong and sustainable public
finances – and by using the powers of independence to grow our economy,
could be £5 billion per year better off by 2029-30.
On all key fiscal
measures forecast by the Scottish Government, Scotland’s finances in
2016-17 will be similar to, or stronger than, both the UK and the G7
industrialised countries as a whole.
Scotland’s
public finances show debt, under various assumptions, on a downward trajectory,
enabling future Scottish Governments to start an oil savings fund.
The detailed
projections for public finances also show Scotland’s estimated debt to
GDP ratio in 2016-17 is forecast to be lower than the UK’s under any
potential outcome of negotiation with the UK over public sector assets and
liabilities. The paper expands the analysis of Scotland’s public finances
in 2016-17 provided in Scotland’s Future by
demonstrating how Scotland’s fiscal position is likely to evolve as a
result of Scotland’s future economic performance.
The paper
shows:
- Over the
period 2008-09 to 2012-13 Scotland’s relatively stronger fiscal position
is estimated to have been worth £8.3bn, equivalent to £1,600 per
person;
- When
compared to projections for the UK in 2016/17 – including projected
spending by the official opposition – Scotland’s finances are
similar to or stronger than the UK in all scenarios;
- Scotland’s net fiscal balance in 2016-17 –
taking account of all revenues and all spending including this
government’s immediate post-independence priorities such as childcare
continues to be within the range set out in Scotland’s Future.
The paper also
illustrates the potential long-term benefits to Scotland’s public
finances from using the powers of independence to grow Scotland’s economy
and create a more successful country. For example, following
independence:
- A 0.3
percentage point increase in our long run productivity growth rate, which will
narrow some of the gap with our competitors, could see tax revenues increase by
£2.4bn a year by 2029-30;
- Increasing our employment rate by 3.3 percentage points
to move Scotland up to the level of the top five performing countries in the
OECD could increase revenues by £1.3bn a year by 2029-30;
- And
increasing our population, but still by less than the projected growth for the
UK as a whole, could increase revenues by £1.5bn a year by
2029-30.
Collectively such
improvements amount to a boost to tax receipts of an additional £5
billion a year after 13 years.
Commenting on the
paper, First Minister Alex Salmond said:
“Scotland is
one of the wealthiest countries in the world, more prosperous per head than the
UK, France and Japan, but we need the powers of independence to ensure that
that wealth properly benefits everyone in our society.
“That wealth
means we will start life as an independent nation with strong finances and huge
economic potential.
“The latest
figures show that by using the powers that only independence will bring we can
deliver an independence bonus with increased revenues for Scotland.
“The choice
Scotland will make in September is between the opportunity to grow our economy,
to boost revenues and to invest in public services or to continue with an
economic policy set in Westminster that ignores Scotland’s
needs.
“This
analysis shows that on all headline measures of the public finances,
Scotland’s fiscal position is forecast to be stronger than or at the very
least level with the UK position.
“This paper
gives a very clear picture of what independence could deliver in economic terms
for the people of Scotland. By increasing productivity by 0.3 percentage points
per annum, boosting the working age population by less than the predicted UK
rate, and increasing the employment rate by just over 3 percentage points,
bringing Scotland up to the same standard as the top countries in the OECD, we
can generate over £5 billion a year of extra revenues within 15 years,
without increasing tax by a penny.
“People in
Scotland are getting a raw deal under the current arrangement – paying
more into Westminster than we get out. In the five years to 2012-13, Scotland
has on average accounted for 9.5% of UK tax receipts with estimates showing we
have received 9.3% of UK public spending.
“Tax
receipts in Scotland have averaged £10,000 per head over this period,
£1,200 or 14% higher than in the UK as a whole.
The 3rd Oil and
Gas analytical bulletin has also been published today focusing on the outlook
for the industry over the next five years. Initial estimates show that recent
declines in production are starting to be reversed.
Commenting on the
bulletin, Finance Secretary John Swinney said:
“North Sea
oil and gas is a fantastic natural asset which has a great future for many
decades to come.
“And it is
vital that we make sure future revenues are invested in the future of Scotland,
unlike the way they have been squandered by successive Westminster
administrations over the last 40 years.
“Using the
industry estimates of production and realistic oil prices it is clear that
Scotland’s oil industry will continue to make a valuable contribution to
our public finances for many years to come.
“As the
industry recovers from UK tax changes, invests in new fields and extends the
life of existing fields, revenues will begin to rise again.
Oil and Gas
UK’s central forecast is for production to increase by approximately 14%
between 2013 and 2018.
“The figures
published today show that Scotland’s finances in 2016/17 will be in a
strong position and future Scottish Governments will have the opportunity to
start an oil savings fund from the point of independence.
“Scotland is
rich in natural resources, with estimates showing that we are the largest oil
producer and the second largest gas producer in the EU. Up to 24 billion
barrels of oil and gas reserves remain under the North Sea – it is vital
that Scotland benefits from that wealth to come.”
Notes To
Editors
Outlook for
Scotland’s Public Finances is available at:http://www.scotland.gov.uk/Topics/Economy/Publications/PSFOutlook
The report expands
the analysis of Scotland’s public finances in 2016-17 provided
in Scotland’s Futureby demonstrating how Scotland’s
fiscal position is likely to evolve over a range of time periods and under
different assumptions about the division of UK public sector assets and
liabilities, and Scotland’s future economic performance.
The latest Oil and
Gas analytical bulletin is available at:http://www.scotland.gov.uk/Topics/Economy/Publications/oilandgas/May2014<
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