Key Budget report

Weaker tax take sees Mackay miss out on spending spree

Derek Mackay

Derek Mackay: facing shortfall (pic: Terry Murden)

Scottish Finance Secretary Derek Mackay faces pressure to make up a shortfall on his tax revenues despite promises of a spending spree promised by the Westminster party leaders.

Strathclyde University’s Fraser of Allander Institute said funding increases would lead to two years of real term rises of 2% in Scotland’s block grant from Westminster, the first such increases since the start of the ‘austerity’ period.

But the institute’s head of fiscal analysis David Eiser said these increases will be partly cancelled out by slower than expected growth of Scotland’s tax base.

The FAI published its annual Scotland’s Budget Report at a gathering at the National Museum of Scotland in Edinburgh.

It said Scottish income tax revenues in 2017/18 and 2018/19 turned out to be lower than forecast and the Scottish Government will be required to repay £200m in 2020/21 and potentially as much as £600m in 2021/22.

On the basis of the latest official forecasts, Scottish income tax revenues are “on track to disappoint relative to the rest of the UK”.

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