The Scottish Fiscal Commission has today published official forecasts for income tax revenue, updated to reflect the Scottish Government’s final Budget announced last Wednesday in the Scottish Parliament by the Cabinet Secretary for Finance and Constitution, Derek Mackay.
The final income tax policy is forecast by the Commission to raise £219 million in 2018-19, £55 million more than the policy announced in December. In addition, the extension of the Government’s public sector pay policy is forecast to raise a further £7 million in income tax revenues.
Dame Susan Rice, chair of the Scottish Fiscal Commission, said
“Our updated forecasts published today, reflecting the latest policy changes, show that the Scottish Government will raise £62 million in 2018-19 more than we forecast for December’s Draft Budget.
“The Commission has provided this updated forecast to support the Committee stage of the Budget Process, as agreed with the Parliament and Government last year. Our work is intended to support Budget scrutiny and transparency.”
The Commission’s report is published today ahead of tomorrow’s meeting of the Finance and Constitution Committee.
More details on the Fiscal Commission’s forecast of the policy costing, including its assumptions about behavioural responses, can be found in its report published today on the Commission’s website.
Notes for Editors
1. The Commission’s Report ‘Scotland’s Economic and Fiscal Forecasts: Supplementary Publication - Updated Income Tax Forecasts, February 2018’ is available on the SFC website. It has been added as a supplement to our report: ‘Scotland’s Economic and Fiscal Forecasts December 2017’ published alongside the Draft Budget 2018-19. This page includes accompanying data spread sheets.
2. At Stage 1 of the Budget Bill the Scottish Government published their provisional estimate of the additional revenue of around £220 million in 2018-19 from the revised income tax policy. Their factsheet noted that the Commission would provide the formal revenue estimate. We are today publishing our latest official and independent estimate of income tax revenue from 2018-19 through to 2022-23 alongside a breakdown of static and behavioural changes by income tax band. This timing was agreed with Parliament and the Government before Christmas and was published on our website.
3. The Government also announced an extension of its public sector pay policy by which those earning up to £36,500 will receive a minimum 3 per cent pay increase as compared with those earning up to £30,000 in December’s Draft Budget. The Government’s provisional estimate did not include the consequences of the changes in public sector pay.
4. Income tax is now forecast to raise £12.2 billion in 2018-19 in total. The details of the new forecast for all years up to 2022-23 is contained in the Commission’s publication today.
5. The Commission will be publishing an Occasional Paper with more detail on its approach to income tax modelling and behavioural assumptions on Wednesday 7 March 2018.
6. The Scottish Fiscal Commission (2016) Act established the Commission as a statutory body, independent of the Scottish Government, to produce official fiscal and economic forecasts for the Government to use in its budget and financial planning. The Commission’s forecasts will also assist the Parliament’s scrutiny of the Draft Budget and Budget Bill.
7. The Commission is chaired by Dame Susan Rice and there are two other Commissioners, Professor Alasdair Smith and David Wilson.
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