Scottish deficit is twice that of the UK and higher than Greece

October 13, 2016 1:00 AM

Research from TaxPayers' Alliance shows an independent Scotland would have to depend on measures such as the following in order to balance the books:
  • Increasing basic rate income tax to 39 per cent
  • Doubling VAT to 40 per cent
  • Cutting health spending by 82 per cent
  • Cutting all spending on police, transport, police and agriculture
New research from the TaxPayers' Alliance reveals that the Scottish deficit, at 9.5 per cent of GDP, is the highest in the EU, including Greece, and twice that of the UK.
Excessive spending cannot be supported in the absence of subsidies, without taxpayers either experiencing huge tax rises and/or a significant reduction in public spending, affecting frontline services.

Scotland's overspending is such a chronic problem that the issue needs tackling irrespective of the independence question, as the country ran up a fiscal deficit of £14.8bn in 2015-16.

Scotland's public spending remains far in excess of England's with spending per head being 20 per cent higher, heavily subsidised by taxpayers elsewhere. Areas where provision is currently more generous than in England, such as free university tuition, are ripe for reform in order to bring spending under control.
Key findings:
  • At £14.8bn Scotland's fiscal deficit last year was 9.5 per cent of Scottish GDP
  • Scotland has run a deficit every year since devolution in 1999 despite sometimes record oil prices
  • To become an EU member, an independent Scotland would be forced to tackle its deficit as any deficit over 3 per cent of GDP is deemed excessive by the EU
  • This could be achieved
    • either by tax increases:
      • The basic rate of income tax could be increased from 20p to 39p
      • VAT could be doubled to 40 per cent
    • or, by reducing deficit to 3 per cent of GDP through spending cuts. In 2015-16 this would have required:
      • Eliminating all spending on defence (£3bn), public order and safety (£2.8bn), transport (£3.2bn) and agriculture, forestry and fisheries (£0.8bn)
      • Cutting health spending by 82 per cent
John O'Connell, Chief Executive of the TaxPayers' Alliance, said:

"Scottish taxpayers face a huge deficit that must be tackled. Public spending promises made today will be paid for by tomorrow's taxpayers, which means higher taxes and more debt for our children and grandchildren. Politicians in Holyrood must do the responsible thing and commit to getting the public finances under control."

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