Poor awareness of devolved powers
Public unclear over which parliament is raising taxes
Taxing issues: Charlotte Barbour, Jim Robertson and Joanne Walker of the Scottish Taxes Policy Forum (pic: Terry Murden)
Confusion over the Scottish tax system is rife, with the public unable to work out which taxes are the responsibility of Holyrood or Westminster.
Tax and accountancy bodies are now calling for action to improve public understanding and awareness of Scotland’s devolved tax powers after a poll found an alarming lack of understanding of the system.
The survey found that:
- 52% of respondents said they had no understanding of what defines a Scottish taxpayer
- 66% were unaware that income tax is the responsibility of both Westminster and Holyrood
- Only 18% of respondents believed the Scottish tax system was clear and easy to understand and only 14% understood the relationship between UK and Scottish taxes
- 16% believed the Scottish parliament is responsible for corporation tax (it is 100% controlled by Westminster)
- 24% believed land and buildings transaction tax (paid on property deals) is the responsibility of the UK parliament (it is 100% controlled by Holyrood)
- Despite the Scottish government cutting taxes for the lower paid just 11% of Scots earning less than £30,000 per year believe that they have paid less in income tax in recent years
The poll was commissioned by the Chartered Institute of Taxation (CIOT) for the Scottish Taxes Policy Forum – a collaboration between CIOT and the Institute of Chartered Accountants of Scotland (ICAS).
It that found 84% of Scots think that they need better information about how taxes are decided in Scotland.
A paper, Devolving Taxes across the UK: Learning from the Scottish Experience, calls for a more realistic timeframe between the UK and Scottish Budgets, the introduction of an annual Scottish Finance Bill and a permanent Tax Committee at Holyrood to increase the visibility of tax policy decisions
It says there should be greater policy collaboration between the Scottish Government and Revenue Scotland, and between Westminster and the devolved governments in Wales, Scotland and Northern Ireland.
Jim Robertson, chairman of the Scottish Taxes Policy Forum, said: “The findings of this poll provide further evidence that the public is struggling to make sense of the tax powers that have been devolved to Holyrood and the changing nature of Scotland’s tax landscape.
“Scotland’s devolved tax journey has only recently begun but we hope that politicians and policy makers will take our report and the results of our polling and use these as the basis for a more informed debate about Scotland’s changing tax landscape.”
The CBI is calling for a fresh regulatory and tax approach for the financial services to deal with the challenges and opportunities presented by a rapidly changing technological landscape.
Funding our Future, the result of conversations with financial services firms across the UK, illustrates how the sector is a crucial enabling industry for the wider British economy.
While firms have welcomed the Government’s support for developments such as FinTech and a new regulatory sandbox, the report says they need regulations that are fit-for-purpose in a new technological age. Among other proposals, the CBI is suggesting:
- New mechanisms, such as a new Treasury Select Committee sub-committee for financial services, to scrutinise regulations and taxes that put customers first
- Strengthening engagement with the Financial Stability Board and more international regulatory coherence to support investment and innovation
- A cross-sector financial services technology “hub”, supported by the Treasury and Financial Conduct Authority, to share best practice, knowledge and latest technologies.