Towards a 'Scandinavian model' for Scotland

Emonts-Holley, Tobias and Greig, Alastair and Lecca, Patrizio and Lisenkova, Katerina and McGregor, Peter G and Swales, J. Kim (2016) Towards a 'Scandinavian model' for Scotland. Fraser of Allander Economic Commentary, 40 (3). pp. 27-35. ISSN 2046-5378

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The fiscal powers of the Scottish Government have recently been significantly enhanced as a consequence of the implementation of the Scotland Act 2012, which required the Parliament to set a Scottish Rate of Income Tax (SRIT) from April 2016. The SRIT can vary from that in the rest of the UK by up to 10p in the pound. More extensive powers over income tax will come into effect in April 2017 as a consequence of the Scotland Act 2016, which sought to implement the proposals of the Smith Commission (2014). The Scottish Government will then gain the power to set income tax rates and thresholds (but not personal allowances). All income tax receipts on wage income collected in Scotland will be received by the Scottish Government, with a corresponding adjustment in the block grant, as detailed in the new Fiscal Framework (2016). These changes will make Scotland one of the most powerful devolved governments in the world in terms of the proportion of public spending and tax revenues under its control, although there of course remains a debate about how effective these new powers are and whether or not they go far enough.