Commenting on the UK Government’s Budget, Laurie Macfarlane, Co-Director of the think tank Future Economy Scotland, said:

“Rachel Reeves has correctly identified the core challenge: if we want strong, effective public services, tax revenues must rise. However, the chancellor’s self-imposed fiscal rules and election pledges resulted in a chaotic mish-mash of tax changes – made worse by weeks of leaks and speculation.

“By freezing income tax thresholds, Reeves has chosen a familiar route – raising income tax by stealth. While revenues do need to increase over the long term, this should be done in a way that is fairer and transparent. A tax on higher-value properties is a step forward, but it is no substitute for long-overdue, fundamental reform of council tax. Likewise, it is disappointing that the chancellor has once again avoided long-needed reforms to the taxation of wealth, which would have been fairer than squeezing middle earners. The decision to scrap the two-child benefit cap is welcome and long overdue, and will also save the Scottish Government around £150m, as it will no longer need to fund its proposed mitigation from devolved budgets.

"Overall however, the budget is full of short-term fixes that do little to put the UK on a sustainable path. The budget also has significant implications for Scotland. Although Scottish income tax rates remain unchanged, rUK threshold freezes will reduce Scotland’s devolved budget, underscoring serious flaws in the fiscal framework.

"Given income tax is devolved, Scotland’s budget should not be hit by Westminster’s decisions when Scottish policy is unchanged. Yet this is exactly what will happen, forcing the Scottish Government to raise taxes or cut spending simply to stand still. The UK Government should begin talks with the Scottish Government to revise the fiscal framework and prevent this in future."

ENDS

 

NOTES TO EDITORS 

 

[1] To request an interview with a spokesperson or for any other questions please contact press@futureeconomy.scot or call 07909107890 

[2] Future Economy Scotland is a non-partisan think tank that aims to create a new economy that is democratic, sustainable and just. The organisation does not have a formal stance on Scotland’s constitutional future, and is not aligned to any political party or any politician. The organisation is a not-for-profit company limited by guarantee operating with charitable principles. For more information visit: www.futureeconomy.scot