The Scotland Act 2012 gave new powers to the Scottish Parliament relating to taxation and borrowing. In April 2015, stamp duty land tax (SDLT) and landfill tax were fully devolved to the Scottish Parliament and replaced by the land and buildings transaction tax and the Scottish landfill tax respectively.
The Command Paper: Strengthening Scotland’s Future – published alongside the Scotland Bill in 2010 – set out our role in providing forecasts of Scottish income tax, landfill tax, stamp duty land tax and aggregates levy receipts.
In September 2014, the Smith Commission recommended the devolution of air passenger duty (APD) to the Scottish Parliament and the assignment of a share of VAT revenues. It also proposed more flexible powers over income tax than those in the 2012 Act. In May 2015, the UK Government committed to implement the Smith Commission recommendations in full, and passed the resulting Scotland Bill 2016 as an act of parliament in March 2016.
The Scottish Fiscal Commission (SFC) was established in 2014 as the independent fiscal institution for Scotland. The SFC operated as a non-statutory body from June 2014 to March 2017, scrutinising the Scottish Government’s forecasts of tax revenues devolved to Scotland. From 1 April 2017 the SFC has become a statutory body as set out in the Scottish Parliament’s Scottish Fiscal Commission Act 2016 and will directly produce forecasts for the Scottish Government’s receipts from the fully devolved taxes, income tax and expenditure on devolved social security. The SFC is a fellow member of the OECD’s network of Independent Fiscal Institutions.
In February 2016 the Scottish and UK Governments’ agreed the Scottish Government fiscal framework. This sets out our role in continuing to produce forecasts for the whole of the UK and also sets out a duty of cooperation between ourselves and the SFC.
We are drafting a full memorandum of understanding with the SFC and will publish it once is has been agreed. In the interim we are operating using the following principles.
Evidence to the Scottish Parliament