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Written question asked by Gordon Brown (Labour) on Wednesday, 18 December 2013, in the House of Commons. It was due for an answer on Monday, 6 January 2014. It was answered by Danny Alexander (Liberal Democrat) on Thursday, 9 January 2014 on behalf of the Treasury.

Public Finance: Scotland

Question

To ask the Chancellor of the Exchequer (1) with reference to the report, Fiscal sustainability of an independent Scotland, published by the Institute for Fiscal Studies in November 2013, if he will make an estimate of the tax rise or public expenditure reduction that would be required (a) per person and (b) per household to close the fiscal gap identified in that report.;

Answer

Based on the main IFS projections, an independent Scotland would need to make permanent tax increases or spending cuts in 2020 equivalent to £6.1 billion (in 2012-13 prices) to put debt on course to reach 40% of GDP in 2062-63. This is equivalent to tax increases or spending cuts of £1,150 per person and £2,560 per household. Under their most optimistic scenario, the IFS determined that an independent Scotland would need to make a permanent adjustment in 2020 equivalent to increasing the basic rate of tax by 8 pence, which would add an average of £1,000 per year to the income tax of a basic rate taxpayer (in 2012-13 prices).

The most optimistic IFS scenario for an independent Scotland still therefore means an adjustment that would be two and half times the size that the IFS forecast would be required for the UK.

Secondary information

Type
Written question
Reference
181224; 573 c294W
Session
2013-14
Subjects
Public finance Scotland Sovereignty
Contains statistics
Yes
Link
View this Written question on www.publications.parliament.uk