By Joanne Walker CIOT Scottish Technical Officer.
As debates continue over whether Holyrood has sufficient powers to weather the coronavirus economic storm, we shouldn’t lose sight of the need to ensure that its tax powers remain fit for purpose. Scotland’s devolved tax system already looked like being an election hotspot before Covid-19. It is likely to be thrust into even sharper focus as ministers balance the costs of their existing commitments against the price of lockdown. It is a scenario that reminds us that the case for improving the scrutiny of Scottish taxes has never been stronger.
Across the UK public awareness of the tax system is low. Although you could assume that devolution would make the situation in Scotland different, a poll commissioned by the Chartered Institute of Taxation and conducted over the last two years has suggested a decline in awareness and understanding of Holyrood’s tax responsibilities among Scots. We should be working to reverse this or else the credibility and integrity of the tax system could be at risk.
In recent years there have been positive developments in Holyrood’s efforts to improve how tax decisions are made, firstly with 2017’s budget process review group and most recently with the work of the devolved taxes legislation working group. Quite rightly the latter of these has taken a back seat as the immediacy of the public health crisis has focused efforts elsewhere. As normal business gradually resumes it should be given the opportunity to complete its work as we speed towards next May, so that its recommendations can be adopted by the new parliament.
At present much of the work that keeps our tax regime ticking over is noticed only by the keenest of observers. Parliament is short of time, and tax bills are required to fight a litany of legislative priorities to secure a place on the agenda.
One solution that we and others have argued for is the introduction of an annual Scottish Finance Bill, together with the establishment of a dedicated parliamentary committee to oversee Scottish taxes. This would give MSPs a set point in the parliamentary calendar to keep the regime under review. It could help ensure increased accountability while giving taxpayers a chance to know more about the tax changes that are being made in their name.
The pandemic is likely to have long-term economic repercussions. A tax system that expedites change, enables scrutiny and empowers public participation will be crucial to Scotland’s recovery. It can’t be allowed to slip through the net.
Joanne Walker is Scottish Technical Officer for the Chartered Institute of Taxation and Technical Officer for the Low Incomes Tax Reform Group.
This article first appeared in the 'Thunderer' column of The Times (Scottish edition) and is reproduced here with their permission.