The growing gap: Where tax is raised... and how it is spent

TAX

IN April this year, the SNP Government opted to freeze the higher rate threshold at £ 3, 30 while it increased to £50,000 in the rest of the UK. This followed an overhaul of the system in 2018/19 and further widened the tax gap.

It meant everyone earning £27,000 or more pays more in Scotland.

Someone on £50,000 in Scotland pays £1,5 more than if based south of the Border, rising to £1,79 for those on £75,000 and £2,0 on £100,000. GERS shows that the total amount raised from income tax soared by 7.1 per cent in Scotland, from £11.96billion in 2016/17 to £12.81billion in 2018/19. This was greater than the 6.5 per cent increase across the rest of the UK, from £180.6billion to £192.2billion.

However, Scottish tax receipts grew because of an overhaul that hit middle earners hard in the pocket compared to their neighbours south of the Border, whereas English tax receipts increased despite those earning more than £ 5,000 all benefiting from a substantial tax cut.

The SNP Government also made it much more expensive to buy homes worth more than £325,000 when it introduced the land and buildings transaction tax (LBTT) as a replacement for stamp duty in 2015. It subsequently opted to introduce a 3 per cent supplement on second homes, which rose to per cent in January this year.

The figures show that income from LBTT was £557million last year – exactly the same as the previous year, indicating that growth in the market has stalled.

That said, UK stamp duty income fell from £17.2billion to £16.7billion over the same period, proving that it remains a difficult time for the property market.

Other major contributors to Scotland’s public purse include national insurance, which is controlled by Westminster and raised £10.9billion for the Treasury last year, and VAT, which brought in £11.1billion. Across the whole of the UK, total North Sea tax revenue increased from just £36million in 2016/17 to £1.3billion in 2017/18, before slipping back slightly to £1.2billion last year.

WELFARE

BY far the largest area of public expenditure in Scotland is ‘social protection’, made up of benefits, pensions and social care for the elderly. It received £24.1billion of public funds in Scotland last year – nearly double the £12.6billion spent on health.

Total social security spending last year was 3.7 per cent higher than the previous year. The tranche of ten welfare powers

which are devolved or in the process of being devolved to the Scottish parliament, including disability living allowance and personal independence payments, cost £3.08billion, up 3.9 per cent on £2.97billion in 2017/18.

EDUCATION

THE Scottish Government faced criticism this month for another decline in school exam performance.

The GERS figures show spending on education and training fell marginally last year, mainly as a result of lower capital spending. Overall spending fell from £8.493billion in 2017/18 to £8.487billion last year.

HEALTH

SNP ministers have railed against the approach taken on the NHS by the UK Government for years.

However, the GERS figures show that spending is increasing at a slower rate in Scotland than the rest of the UK.

In Scotland, £13.1billion was spent on health in 2018/19, up 2.2 per cent from £12.8billion the previous year.

However, there was a 3.8 per cent increase across the UK, from £147.3billion in 2017/18 to £152.9billion in 2018/19.