Taxation in Scotland today involves payments that are required to be made to three different levels of government: to the

UK government ga, Rialtas a Shoilse gd, Riaghaltas a Mhòrachd , image = HM Government logo.svg , image_size = 220px , image2 = Royal Coat of Arms of the United Kingdom (HM Government).svg , image_size2 = 180px , caption = Royal Arms , date_est ...

, to the Scottish Government and to

local government Local government is a generic term for the lowest tiers of public administration within a particular sovereign state. This particular usage of the word government refers specifically to a level of administration that is both geographically-l ...

. Currently 32.4% of taxation collected in

Scotland Scotland (, ) is a Countries of the United Kingdom, country that is part of the United Kingdom. Covering the northern third of the island of Great Britain, mainland Scotland has a Anglo-Scottish border, border with England to the southeast ...

is in the form of taxes under the control of the Scottish parliament and 67.6% of all taxation collected in Scotland goes directly to the UK government in taxation that is a reserved matter of the UK parliament.

History

Until the 17th century, taxation was regarded as 'an extraordinary source of revenue that was levied for a specific purpose such as the defence of the realm'. However, during the 17th century,

Parliament In modern politics, and history, a parliament is a legislative body of government. Generally, a modern parliament has three functions: representing the electorate, making laws, and overseeing the government via hearings and inquiries. Th ...

permitted a Land Tax to be collected from 1667, a

Hearth tax A hearth tax was a property tax in certain countries during the medieval and early modern period, levied on each hearth, thus by proxy on wealth. It was calculated based on the number of hearths, or fireplaces, within a municipal area and is ...

from 1691-1695 and a Poll tax from 1693-1699. The 1707

Union Union commonly refers to: * Trade union, an organization of workers * Union (set theory), in mathematics, a fundamental operation on sets Union may also refer to: Arts and entertainment Music * Union (band), an American rock group ** ''Un ...

of the

Kingdom of Scotland The Kingdom of Scotland (; , ) was a sovereign state in northwest Europe traditionally said to have been founded in 843. Its territories expanded and shrank, but it came to occupy the northern third of the island of Great Britain, sharing a l ...

with the

Kingdom of England The Kingdom of England (, ) was a sovereign state on the island of Great Britain from 12 July 927, when it emerged from various History of Anglo-Saxon England, Anglo-Saxon kingdoms, until 1 May 1707, when it united with Kingdom of Scotland, ...

formed a new

Kingdom of Great Britain The Kingdom of Great Britain (officially Great Britain) was a Sovereign state, sovereign country in Western Europe from 1 May 1707 to the end of 31 December 1800. The state was created by the 1706 Treaty of Union and ratified by the Acts of ...

, so that responsibility for taxation in Scotland became a matter for the

Westminster Parliament The Parliament of the United Kingdom is the supreme legislative body of the United Kingdom, the Crown Dependencies and the British Overseas Territories. It meets at the Palace of Westminster, London. It alone possesses legislative supremacy ...

, now the legislature for the new state.

Devolution of tax powers

The creation of a devolved Scottish parliament in 1999 was accompanied by a limited transfer of taxation powers: the

Scotland Act 1998 The Scotland Act 1998 (c. 46) is an Act of the Parliament of the United Kingdom which legislated for the establishment of the devolved Scottish Parliament with tax varying powers and the Scottish Government (then Scottish Executive). It was o ...

transferred the power to legislate for local taxation and also the power to vary income tax by plus or minus 3 pence in the pound. Most taxation powers in Scotland following the creation of the parliament remained a reserved matter for Westminster. Following the

Calman Commission The Commission on Scottish Devolution ( gd, Coimisean Fèin-riaghlaidh na h-Alba, sco, Commeessioun on Scots Devolutioun), also referred to as the Calman Commission or the Scottish Parliament Commission or Review, was established by an oppositi ...

, the

Scotland Act 2012 The Scotland Act 2012 is an Act of the Parliament of the United Kingdom. It sets out amendments to the Scotland Act 1998, with the aim of devolving further powers to Scotland in accordance with the recommendations of the Calman Commission. It ...

transferred powers over Stamp duty Land Tax, and Landfill Tax (both since replaced by

Land and Buildings Transaction Tax Land and Buildings Transaction Tax (LBTT) is a property tax in Scotland. It replaced the Stamp Duty Land Tax from 1 April 2015. LBTT is a tax applied to residential and commercial land and buildings transactions (including commercial purchases ...

and Scottish Landfill Tax, respectively) and reduced rates of Income tax in Scotland by 10 pence in the pound at all bands, reducing the Barnett formula by the equivalent sum, and requiring the Scottish parliament to set a Scottish Income tax rate to replace the lost revenue but with the ability to set it higher or lower than 10 pence in the pound if it wished. Following promises made during the 2014 Scottish independence referendum, Scottish independence referendum that led to the Smith Commission, the Scotland Act 2016 added powers over Air Passenger Duty and full control over Income tax on non savings and non dividend income (excluding the personal allowance which is still set by the UK parliament.) Despite these tax powers having been transferred, over half of all taxes collected in Scotland remains under the direct control of the UK parliament which has remained a reserved matter to itself all powers over United Kingdom corporation tax, Corporation tax, National Insurance, Value-added tax (United Kingdom), Value-added tax (VAT), Capital gains tax in the United Kingdom , Capital gains tax, Inheritance Tax (United Kingdom), Inheritance tax, Aggregates Levy Insurance Premium Tax (United Kingdom), Insurance Premium Tax and Motoring taxation in the United Kingdom, Motoring taxes.{{cite web, title=What are Scotland's tax powers? , url=https://www.bbc.co.uk/news/uk-scotland-scotland-politics-35866776%20%22What%20are%20Scotland's%20tax%20powers?", date=30 November 2016, access-date=7 February 2018

References

Taxation in Scotland,

History

Devolution of tax powers

See also

References