Proper scrutiny of devolved tax is long overdue

28 Sep 2018

Moira Kelly, chair of the CIOT's Scottish Technical Committee, wrote for the Scottish edition of The Times on 27 September 2018 on the steps the Scottish Government can take to improve scrutiny of devolved tax policy. Please click on the link above for the original article.

The Scottish government likes to hang its hat on being the custodian of a devolved tax regime that is open, constructive and consultative. But in order to truly practise what it preaches, it can ‚ and should ‚ go further.

Earlier this month, halfway through Nicola Sturgeon‚ s Programme for Government, there was a commitment to improve the ‚ certainty, transparency and efficiency‚ of tax policy-making. It was as close an endorsement as any of an idea put forward by the Chartered Institute of Taxation and supported by MSPs of all persuasions. Namely, that it‚ s time for an annual Scottish Finance Bill to shine a stronger light on Holyrood‚ s fiscal oversight.

The much-heralded Budget Process Review Group laid down a marker for MSPs last year when it recommended the introduction of a one-stop shop for tax policy-making decisions. In contrast to its Westminster counterpart, the Scottish parliament lacks an annual mechanism where MSPs can review and approve changes to the devolved taxes. This lack of focus belies the increasing importance of these taxes to the Scottish budget, dilutes parliamentary scrutiny and denies MSPs the opportunity to draw on independent expert counsel.

While the UK system has many faults, the finance bill is nevertheless an important and worthwhile focal point for wider public and political engagement in the tax policy process. The finance and constitution committee sought to achieve this type of engagement with its inquiry into the Scottish approach to taxation. However, the inquiry appears to have sunk without trace as MSPs grapple with the impending challenge of Brexit, taking up much of their workload.

Many of the tools essential to the scrutiny of the devolved taxes are already in place. The appointment of a minister, Kate Forbes, for whom tax policy is a central part of her job; the implementation of many of the recommendations of the budget review group; and the role of the Scottish Fiscal Commission as the independent arbiter of the country‚ s finances are all encouraging moves.

But the final challenge ‚ finding the right forum to enable improved oversight ‚ remains. By the time voters head to the polls in 2021, Scotland‚ s tax powers will be in a fundamentally different place compared with 2016. Finding a solution that improves the scrutiny, accountability and visibility of the taxes that we are responsible for can only be good for the health of our democratic debate.