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Fiscal challenges facing an independent Scotland - by Mike Denham for TaxPayers' Alliance

New research by the TaxPayers' Alliance has found that an independent Scotland would need to raise the basic rate of income tax to 46 pence in the pound to pay for its current level of spending. Written by TPA chairman Mike Denham, his detailed analysis reveals the current rate of Scottish spending (£11,247 per head) could not be supported without huge tax rises or a significant reduction in public spending. His findings have already been extensively covered in today's Scottish Mail on Sunday. Furthermore, were Scotland to leave the union it may be liable to take a share of existing UK debt of around £300 billion - twice the size of Scotland's GDP.

International comparisons don't make for good reading either. Scotland's general government financial deficit has recovered more slowly than countries that were worse affected by the 2008 crash. Nor are North Sea oil revenues a get-out-of jail card. Scotland ran a deficit even when oil prices exceeded $100 per barrel but the oil fields are fast depleting. Considering 44 per cent of Scottish income taxpayers already pay higher rates than elsewhere in the UK, further increases on the scale required would punish taxpayers and seriously undermine economic growth.

The TPA doesn't take a position on Scottish independence but taxpayers expect their leaders to get to grips with the reality of Scotland’s fiscal position. An independent Scotland would start life with new economic freedoms, but also retain a fiscal deficit considerably larger than any other European country. Politicians need to have an honest debate about public finances, whatever their position on the Union.

Click here to read the full report.

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Photo by Mohammed Alhinai on Unsplash

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