A primer on the Scottish Parliament's new fiscal powers: what are they, how will they work, and what are the challenges?

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Abstract

This article provides an overview of Scotland’s new Fiscal Framework. The Fiscal Framework sets out how the new powers devolved to the Scottish Parliament in the Scotland Acts 2012 and 2016 will be made operational. It provides a brief overview of the history of fiscal devolution to Scotland since the establishment of the Scottish Parliament in 1999. From relying on a Block Grant from Westminster to fund virtually all its expenditure, the Scottish Parliament now has a range of revenue raising powers including substantial flexibility to vary income tax rates and thresholds; moreover the Scottish budget will in future be much more closely linked to the performance of the Scottish economy. In addition, the Scottish Parliament will gain a range of powers in relation to social security. The mechanisms and method(s) for adjusting Scotland’s Block Grant – Block Grant Adjustments (BGA’s) – the forecasting role of the new Scottish Fiscal Commission and Scotland’s new capital borrowing, resource and cash management powers are all outlined. . Finally, the implications for Scotland’s budget process and what the new arrangements could mean for the Scottish Government’s ability to impact on Scotland’s economy
LanguageEnglish
Pages26-41
Number of pages17
JournalFraser of Allander Economic Commentary
Volume41
Issue number2
Publication statusPublished - 29 Jun 2017

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Parliament
Scotland
Fiscal
Revenue
Tax rate
Management power
Resource management
Income tax
Expenditure
Budget process
Government
Devolution
Borrowing
Cash management
Social security

Keywords

  • Scottish economic activity
  • Scotland
  • fiscal framework

Cite this

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title = "A primer on the Scottish Parliament's new fiscal powers: what are they, how will they work, and what are the challenges?",
abstract = "This article provides an overview of Scotland’s new Fiscal Framework. The Fiscal Framework sets out how the new powers devolved to the Scottish Parliament in the Scotland Acts 2012 and 2016 will be made operational. It provides a brief overview of the history of fiscal devolution to Scotland since the establishment of the Scottish Parliament in 1999. From relying on a Block Grant from Westminster to fund virtually all its expenditure, the Scottish Parliament now has a range of revenue raising powers including substantial flexibility to vary income tax rates and thresholds; moreover the Scottish budget will in future be much more closely linked to the performance of the Scottish economy. In addition, the Scottish Parliament will gain a range of powers in relation to social security. The mechanisms and method(s) for adjusting Scotland’s Block Grant – Block Grant Adjustments (BGA’s) – the forecasting role of the new Scottish Fiscal Commission and Scotland’s new capital borrowing, resource and cash management powers are all outlined. . Finally, the implications for Scotland’s budget process and what the new arrangements could mean for the Scottish Government’s ability to impact on Scotland’s economy",
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