The Chartered Institute of Taxation (CIOT) and ICAS (Institute of Chartered Accountants of Scotland) are calling on Scottish political parties to raise public awareness of fiscal decentralization in the next Scottish Parliament, as a new poll shows that a third of Scots do not know it. that the Scottish Parliament has made changes to the tax system.
Tax and accounting bodies make the call in a new paper, Building a better tax system, outlining their priorities for the decentralized tax system at the next Scottish Parliament.
The survey of 1,098 adults in Scotland was carried out by the Diffley Partnership in March 2021. It is the third to be commissioned by the CIOT since the introduction of the new Scottish tax system in 2018.
The 2021 survey found that1:
- 33% of those polled said they were unaware that the Scottish Parliament had made changes to the tax system since 2015 (such as income tax and council tax).
- 26% said they were ‘unaware’ of the powers of the Scottish Parliament to change income tax rates in Scotland, while 25% said the same for the powers of Holyrood in municipal tax, corporate rate and tax on land and real estate transactions.
- Just over one in four (27%) correctly identified that income tax powers are shared between the Scottish and UK parliaments, a drop of 4 points since the survey was conducted for the first time in 2018.
- 83% of Scots surveyed believe they need better information on how taxes are decided in Scotland. This compares to 86% in 2019 and 84% in 2018
- 39 percent knew little or a lot about Scottish taxpayer status (the rules that define who is entitled to pay Scottish income tax). This is an increase from the 34% who responded this way in 2019, but 9% less than the 2018 survey
Steps that CIOT and ICAS would like to see introduced in the next Scottish Parliament include:
- Strengthen parliamentary scrutiny of taxation by introducing a Scottish equivalent of the Westminster Finance Bill to make changes to the tax system easier and more visible and removing the constitutional mandate of the Finance Committee to allow it to spend more time reviewing politics fiscal
- Better budget coordination between the Scottish and UK governments to overcome recent budget delays which the organizations say have “ gone beyond the devolution regulation ”
- Limit the use of Holyrood’s tax powers as a source of “ last minute budget concessions ” and move towards developing a longer term approach to tax policy development that considers existing tax powers alongside any future proposal for new taxes
- Improve public awareness and understanding of the Scottish tax system through increased visibility of taxation in the Scottish political calendar and the promotion of tax education in the Scottish curriculum
Alexander Garden, Chairman of the Scottish Technical Committee of CIOT, said:
“As political parties explain how they plan to use Holyrood’s tax powers, it should be worrying that a third of respondents are unaware that the Scottish Parliament has made changes to the tax system in Scotland.
“The arguments for increased awareness have arguably been reinforced by the decentralization and divergence that has taken place in recent years.
‘As taxes represent a significant amount of money spent by Holyrood, it should be a priority for the next Scottish Parliament to ensure that taxpayers can better understand Scotland’s tax powers and the changes that are being made in their name.”
Charlotte Barbour, Director of Taxation at ICAS, added:
“The reality is that at present many of the day-to-day changes necessary to maintain the integrity of the decentralized tax system are not happening, due to a lack of parliamentary time, or in a way that limits a detailed review.
“Having an equivalent of the UK Finance Bill at Holyrood is one of the ways to raise awareness of Holyrood’s fiscal powers, ensuring that tax policy is more visible on the Scottish political calendar.
“Raising awareness will become more important if discussions about the role of the Scottish tax system become more important as we emerge from the pandemic.”
On the need for a more strategic approach to Scottish tax policy making, Alexandre Garden added:
“We would like to see our PSMs take a longer term approach to thinking about how the Scottish tax system works.
“We need to move away from the recent trend which has seen new tax measures introduced at short notice with limited consultation in return for parliamentary votes, and towards an approach that focuses not only on new taxes, but on how we let’s use the ones we already have. have more efficiently.
“This should include better coordination between the Scottish and UK governments regarding the timing of future budgets. Delays in the last two UK budgets have highlighted challenges for Holyrood in the face of having to agree on tax and spending plans without having a full view of the UK situation. We hope that will change. ”