Magazine article Public Finance

Scotland 'Could Face £1.2Bn Black Hole'

Magazine article Public Finance

Scotland 'Could Face £1.2Bn Black Hole'

Article excerpt

Proposals to give Scotland its own tax-raising powers could leave it with a deficit of more than £1.2bn, leading academics have warned.

Professors Drew Scott, of Edinburgh University, and Andrew Hughes Hallett, of St Andrews University, have reviewed proposals made in a UK white paper last autumn to reform Scotland's funding arrangements.

The UK government plans to allow the Scottish Parliament to create an income tax, initially set at 1Op, following proposals from Sir Kenneth Caiman's commission on Scottish devolution.

The yield from the tax would be a new element in the devolved administration's budgetary revenue and its Westminster-determined block grant would be reduced proportionately.

But the academics point out that the new tax's yield would be based entirely on a Treasury forecast, which is 'neither reliable nor uncontested'. …

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