Revenue concern

‘Unfit’ tax system needs reform says think tank

Income tax own pic
Traditional tax changes will not be sufficient, says report

Scotland’s tax system needs to be redesigned to make it fit for the future, according to a report by a think tank.

A paper for Reform Scotland argues that tax revenues will need to increase to meet pressures driven by an ageing population and to fund the investment needed to tackle climate change.

It says the scale of revenues required means that the “traditional tweaks” – such as to income tax or national insurance – will not be sufficient.

Heather McCauley, author of Taxing Times: why Scotland needs new, more and better taxes said: “Having studied tax systems in similarly sized countries across the world, from New Zealand to Scandinavia, it is clear to me that the current structure of Scotland’s tax system is not fit for the future.

“In short, Scotland needs to start again. It needs a new and fairer tax system, focused more on immobile tax bases such as wealth and less on mobile ones such as employment income.”

Chris Deerin, the director of Reform Scotland, said: “Scotland’s overall population is ageing while our working-age population is shrinking. We must find new revenue just to meet existing commitments, even as new commitments come on line too — such as funding a national care system.

“As Heather McCauley points out in this report, it’s very difficult to see how Scotland can meet its future commitments — whatever its constitutional status — without looking afresh at the tax system, at who and what we tax, and at what the right balance should be.”

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