Mackay: Scottish and UK tax policies likely to diverge

30 Mar 17

Scottish finance secretary Derek Mackay has told the CIPFA Scotland conference he expects Scottish tax policies to diverge increasingly from those of the rest of the UK.

Mackay said the Scottish economy had a need that ran counter to UK policies, when questioned by delegates at St Andrews this morning.

This need was to accommodate for a growing population of young people and a commitment to older citizens that was reflected in free personal care and prescriptions, he explained.

“I think there will be divergence from the rest of the UK around what we might describe as a social contract,” Mackay said.

“Where the divergence is coming, I sense, is around tax.

“You get what you pay for, and we will probably take a different approach from that of the UK government on tax, while continuing to deliver economic growth.”

Mackay was speaking weeks after securing Holyrood approval for the first ever devolved Scottish Budget to include significant tax-raising powers, and the first in half a decade to come from a minority government.

Though he departed from the UK approach on income tax thresholds, he stood by the Scottish National Party’s manifesto commitment to leave the main rates unchanged in this parliament.

But, he said, Scottish demography and expectations were different from elsewhere in the UK, and future divergence seemed likely.

Mackay said he was committed, as finance secretary in a minority government, to evidence-based budgeting and to seeking the early views of other parties.

He was looking to a current independent review of the budget process, on which CIPFA is represented, to recommend “transformation, not just tinkering”.

He also pointed to the new social security powers devolved to Scotland under the 2015 Scotland Act which, he said, would require the Scottish Government to process more transactions per week than it currently does in a year, and which highlighted the importance of the conference theme of embracing digitalisation in delivering cost-efficient, high quality, responsive public services.

The Scottish Government published its digitalisation strategy earlier this month, which accompanies a commitment to extend superfast broadband to every part of Scotland by the end of this parliament. The strategy encourages collaborative investment, data sharing, and nurturing a culture of entrepreneurship in the public sector by empowering staff and learning from mistakes.

  • Keith Aitken
    Keith Aitken

    covers Scottish affairs for Public Finance from Edinburgh. He was formerly economics editor and chief leader writer on The Scotsman and now has a busy freelance career as a writer, broadcaster and event chair.

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