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Publication - Statistics Publication

Government Expenditure & Revenue Scotland 2015-16

Published: 24 Aug 2016
Part of:
Statistics
ISBN:
9781786523730

Government Expenditure and Revenue Scotland (GERS) for 2015-16.

67 page PDF

1.8MB

67 page PDF

1.8MB

Contents
Government Expenditure & Revenue Scotland 2015-16
Chapter 1: Public Sector Revenue

67 page PDF

1.8MB

Chapter 1: Public Sector Revenue

Total Public Sector Revenue: Scotland 2015-16

Introduction

This chapter provides detailed estimates of Scottish public sector revenue.

The majority of public sector revenue payable by Scottish residents and enterprises is collected at the UK level. Generally it is not possible to identify separately the proportion of revenue receivable from Scotland. GERS therefore uses a number of different methodologies to apportion revenue to Scotland. These methods are discussed in the methodology paper on the GERS website. [12]

Following the implementation of the Scotland Act 2012 and Scotland Act 2016, an increasing amount of revenue is set to be devolved to the Scottish Parliament, whereby direct Scottish measures of these revenues will be available. The first revenues which have been devolved are landfill tax and property transaction taxes, with Scottish revenue collected for these taxes from 2015‑16 onwards. Chapter 4 provides more information on current and future devolved taxes.

GERS uses a set of data sources and methodologies developed over a number of years following consultation with, and feedback from, users. In some cases, a variety of methodologies could be applied, each leading to different estimates of public sector revenue in Scotland. Table A.5 in Annex A provides analysis of the confidence intervals around revenue estimates based on survey data.

Estimated Revenue 2015-16

Table 1.1 highlights estimated public sector revenue in Scotland and the preliminary outturn data for the UK in 2015-16. The contribution of each element of revenue to the Scottish total, and the proportion of UK revenue raised in Scotland, are also included in the table. In order to report revenue on a National Accounts basis, the international reporting standards used by governments, a number of accounting adjustments are included in the total revenue estimate. These are primarily symmetric adjustments that also form part of expenditure, and therefore have little impact on the net fiscal balance.

Unlike the expenditure accounting adjustments, which are shown in a separate expenditure line, the revenue accounting adjustments are included within different revenue lines, as is set out in Table A.9 in Annex A. In order to aid transparency, a revenue accounting adjustments line has been added to the tables in this chapter. This is a sub-total of revenue, and does not add to the revenue totals reported in the tables.

Total public sector non-North Sea current revenue in Scotland was estimated to be £53.7 billion in 2015‑16. This is equivalent to 7.9% of UK total non-North Sea current revenue which is 0.3 percentage points lower than Scotland's share of the UK population. [13] In general, Scotland's share of most large revenues is close to either its population or GVA share. However, there are some exceptions to this, discussed below.

Table 1.1: Current Revenue: Scotland and UK 2015-16
Scotland UK Scotland as % of UK
£million % of total non-North Sea revenue £ million
Income tax 12,151 22.6% 168,094 7.2%
Corporation tax (excluding North Sea) 3,130 5.8% 42,888 7.3%
Capital gains tax 375 0.7% 7,107 5.3%
Other taxes on income and wealth 234 0.4% 2,791 8.4%
National insurance contributions 9,323 17.4% 113,440 8.2%
VAT 11,228 20.9% 130,414 8.6%
Fuel duties 2,354 4.4% 27,621 8.5%
Stamp duties 1 716 1.3% 14,662 4.9%
Tobacco duties 1,189 2.2% 9,106 13.1%
Alcohol duties 996 1.9% 10,702 9.3%
Betting and gaming duties 225 0.4% 2,153 10.5%
Air passenger duty 275 0.5% 3,040 9.1%
Insurance premium tax 258 0.5% 3,714 7.0%
Landfill tax 147 0.3% 1,044 14.2%
Climate change levy 186 0.3% 1,875 9.9%
Aggregates levy 53 0.1% 348 15.3%
Inheritance tax 278 0.5% 4,720 5.9%
Vehicle excise duty 456 0.9% 5,922 7.7%
Non-domestic rates 2 1,916 3.6% 26,798 7.2%
Council tax 2,122 4.0% 29,122 7.3%
Other taxes, royalties and adjustments 3 1,535 2.9% 17,077 9.0%
Interest and dividends 382 0.7% 6,202 6.2%
Gross operating surplus 3,802 7.1% 44,761 8.5%
Of which, English Housing Associations - 0.0% 6,847 0.0%
Rent and other current transfers 356 0.7% 4,030 8.8%
Total current revenue (excluding North Sea revenue) 53,689 100% 677,631 7.9%
Of which: revenue accounting adjustments 4,295 8.0% 47,530 9.0%
North Sea Revenue
Population share 6 76 8.2%
Geographical share 60 76 78.5%
Total current revenue (including North Sea revenue)
Population share 53,695 677,707 7.9%
Geographical share 53,748 677,707 7.9%

1 Includes Land and Buildings Transaction Tax, which replaced UK Stamp Duty Land Tax in Scotland from 1 April 2015. Figures for this tax are shown separately in Chapter 4.
2 Excludes non-domestic rates that local authorities pay themselves.
3 This group includes some 11 separate revenues (as set out in the detailed methodology paper on the GERS website). It also contains an accounting adjustment to align the revenue estimates to those in the July 2016 UK Public Sector Finances Statistical Bulletin. This adjustment is apportioned to Scotland on a population share basis.

Revenues where Scotland's share of UK revenue is relatively low are those associated with property or assets, such as stamp duties, capital gains tax, and inheritance tax. This reflects the fact that properties and assets in Scotland tend to have lower prices than the UK average. [14]

Revenues where Scotland has a relatively large share include gross operating surplus ( GOS), which is the operating (or trading) surpluses (or losses) of public bodies. Scotland is estimated to generate approximately 8.5% of UK public sector GOS, slightly higher than Scotland's population share. Scotland's GOS includes Scottish Water, which is a large contributor to UK public corporations' GOS. The equivalent water companies in England and Wales are outside the public sector and hence do not contribute to UK GOS. [15] Scotland's estimated share of UK GOS is lower in this edition of GERS. This is due to the inclusion of English housing associations in the UK figure, as illustrated in Table 1.1.

Scotland tends to also have relatively high shares of duties associated with tobacco and alcohol. This reflects the greater incidence of smoking in Scotland, [16] and also the fact that Scotland has higher consumption of spirits than the rest of the UK. [17]

Table 1.2 below provides a time series of Scotland's share of the largest UK revenues.

Table 1.2: Non-North Sea Current Revenue: Scotland as share of UK
per cent of UK revenue
2011-12 2012-13 2013-14 2014-15 2015-16
Income Tax 7.4% 7.3% 7.2% 7.2% 7.2%
Corporation tax (excl North Sea) 7.3% 7.3% 7.2% 7.3% 7.3%
National insurance contributions 8.1% 8.2% 8.2% 8.2% 8.2%
VAT 8.5% 8.5% 8.6% 8.6% 8.6%
Local authority revenue 7.8% 7.5% 7.3% 7.2% 7.2%
All other revenue 8.6% 8.4% 8.3% 8.2% 8.1%
Total current non-North Sea revenue 8.0% 8.0% 8.0% 7.9% 7.9%
Excluding English HAs 8.1% 8.1% 8.1% 8.0% 8.0%

Note: Local authority revenue consists of non-domestic rates and council tax

Box 1.1: Comparison between GERS and HMRC estimates

Any analysis of public sector receipts in Scotland relies on estimation, and as such alternative estimates are possible. As discussed in the Preface, GERS estimates revenue using a set of apportionment methodologies, refined over a number of years following consultation with, and feedback from, users.

Further work in this area is also being undertaken by the Office for National Statistics ( ONS). The ONS ran a consultation on producing public sector finances estimates for the UK country and regions earlier in the year. The report of this consultation has been published, [18] and as a result, ONS intend to produce initial estimates during the course of 2017.

Since 2013, HMRC have published estimates of the breakdown of taxes they collect in the four countries of the UK. The latest set of estimates for 2014-15 were published in October 2015.

In most cases, the estimates in GERS and the HMRC publication are very similar. For some taxes, there are definitional differences which mean that the figures in the two publications should not be directly compared. For example, within GERS gross VAT receipts are shown before the deduction of government VAT refunds, whilst HMRC figures present net VAT receipts after the deduction of these refunds. For other taxes, notably revenues from oil and gas production, there are methodological differences between the two publications.

HMRC and the devolved administrations are working together to reconcile, and where possible align, methodologies for estimating tax receipts for the UK countries and regions. While some differences remain, the aim is to ensure a clear understanding of the reasons for any differences and highlight these to users and the impact that this may have on any results.

The table below compares the estimates in GERS with those implied by the HMRC publication, both in cash terms and as a share of GDP. In 2012-13 and 2014-15, the difference in non-North Sea revenue is primarily due to taxes where GERS has taken on data updates that were not available when HMRC published in October 2015. These include updates to estimates of income tax, national insurance contributions, and VAT.

Estimates of Total Scottish Revenues 2011-12 to 2015-16

£ million
2011-12 2012-13 2013-14 2014-15 2015-16
Cash estimates: non-North Sea revenues
GERS 47,328 48,192 50,054 51,765 51,639
HMRC 1 47,165 47,777 49,542 51,313 n/a
Difference 163 416 512 452 n/a
Difference (% GDP) 0.1% 0.3% 0.4% 0.3% n/a
Cash estimates: geographical share of North Sea revenues
GERS 9,633 5,306 3,999 1,802 60
HMRC 1 9,055 4,887 3,793 1,678 n/a
Difference 578 419 206 125 n/a
Difference (% GDP) 0.4% 0.3% 0.1% 0.1% n/a
Share of UK total: non-North Sea revenues
GERS 8.0% 8.0% 8.0% 7.9% 7.9%
HMRC 1 8.0% 7.9% 7.9% 7.9% n/a
Difference (% point) 0.0% 0.0% 0.0% 0.0% n/a
Share of UK total: geographical share of North Sea revenues
GERS 87.9% 85.1% 84.0% 80.0% 78.5%
HMRC 82.6% 78.4% 79.6% 74.5% n/a
Difference (% point) 5.3% 6.7% 4.3% 5.5% n/a

1 For revenues not estimated by HMRC, the GERS estimate has been included in the HMRC figure to allow the totals to be comparable

Further information on the HMRC results and methodology is available at:
https://www.gov.uk/government/publications/disaggregation-of-hmrc-tax-receipts

Estimated Revenue: Scotland and the UK, 2011-12 to 2015-16

Table 1.4 overleaf shows estimated current revenue in Scotland and the UK between 2011‑12 and 2015-16. Current non-North Sea revenue in Scotland is estimated to have grown by 13.4% between 2011-12 and 2015-16 in nominal terms, less than for the UK as a whole (15.1%). This difference primarily reflects the fact that capital gains tax, stamp duties, and inheritance tax have grown more slowly in Scotland than in the UK. In general, revenue in Scotland would be expected to grow more slowly than in the UK as Scotland's population, and therefore tax base, has been growing more slowly.

Table 1.3 shows estimates of revenue per person for Scotland and the UK between 2011-12 and 2015-16. Excluding North Sea revenue, revenue per person in Scotland has been lower than in the UK by approximately £400 per year. Including an illustrative geographical share of North Sea revenue, revenue per person in Scotland is lower than the UK average in 2015‑16 by £400. Prior to 2014-15, Scottish revenue per person including North Sea revenue has been higher than in the UK as a whole, with the difference being quite variable.

The inclusion of English Housing Associations in the UK figures broadly increases revenue per person for the UK by £100 a year.

Table 1.3: Current Revenue Per Person: Scotland and UK 2011-12 to 2015-16
£ per person
2011-12 2012-13 2013-14 2014-15 2015-16
Scotland
Excluding North Sea revenue 8,900 9,100 9,400 9,700 10,000
Including North Sea revenue (population share) 9,100 9,200 9,500 9,700 10,000
Including North Sea revenue (geographical share) 10,700 10,100 10,100 10,000 10,000
UK
Excluding North Sea revenue 9,300 9,400 9,800 10,100 10,400
Including North Sea revenue 9,500 9,500 9,800 10,100 10,400
Difference (Scotland minus UK)
Excluding North Sea revenue -400 -400 -400 -400 -400
Including North Sea revenue (population share) -400 -400 -400 -400 -400
Including North Sea revenue (geographical share) 1,300 500 300 -100 -400

1 Figures rounded to nearest £100

Table 1.4: Current Revenue: Scotland and UK 2011-12 to 2015-16
£ million
Scotland UK
2011-12 2012-13 2013-14 2014-15 2015-16 2011-12 2012-13 2013-14 2014-15 2015-16
Income tax 11,127 11,022 11,277 11,735 12,151 151,262 150,713 156,009 162,342 168,094
Corporation tax (excluding North Sea) 2,430 2,557 2,571 2,920 3,130 33,287 35,040 35,716 39,987 42,888
Capital gains tax 277 321 240 293 375 4,336 3,926 3,907 5,559 7,107
Other taxes on income and wealth 238 253 329 215 234 2,901 3,121 4,119 2,654 2,791
National insurance contributions 8,271 8,588 8,826 9,067 9,323 101,597 104,483 107,306 110,260 113,440
VAT 9,516 9,750 10,364 10,733 11,228 112,057 114,428 120,167 124,846 130,414
Fuel duties 2,275 2,257 2,289 2,314 2,354 26,798 26,571 26,881 27,155 27,621
Stamp duties 511 464 662 735 716 8,919 9,140 12,481 13,779 14,662
Tobacco duties 1,208 1,278 1,242 1,211 1,189 9,878 9,590 9,556 9,251 9,106
Alcohol duties 969 946 972 961 996 10,180 10,139 10,308 10,449 10,702
Betting and gaming duties 122 122 173 185 225 1,221 1,228 1,645 1,776 2,153
Air passenger duty 228 244 270 290 275 2,637 2,818 3,003 3,205 3,040
Insurance premium tax 204 202 211 206 258 3,002 3,033 3,018 2,973 3,714
Landfill tax 131 139 150 147 147 1,075 1,116 1,179 1,125 1,044
Climate change levy 63 61 117 161 186 678 663 1,200 1,626 1,875
Aggregates levy 48 43 44 55 53 283 261 294 357 348
Inheritance tax 170 175 210 229 278 2,955 3,150 3,541 3,879 4,720
Vehicle excise duty 477 481 488 458 456 5,930 6,003 6,121 5,910 5,922
Non-domestic rates 1,954 1,930 1,932 1,914 1,916 23,950 25,047 25,885 26,267 26,798
Council tax 1,919 1,940 1,963 2,011 2,122 25,925 26,306 27,528 28,304 29,122
Other taxes, royalties and adjustments 1,038 1,143 1,290 1,441 1,535 11,948 13,073 14,348 16,188 17,077
Interest and dividends 478 455 418 374 382 6,176 6,091 6,151 6,012 6,202
Gross operating surplus 3,528 3,489 3,695 3,696 3,802 39,839 41,555 43,137 44,139 44,761
Of which: English HAs 0 0 0 0 0 4,859 5,601 6,045 6,521 6,847
Rent and other current transfers 148 331 323 414 356 1,768 3,877 3,717 4,648 4,030
Total current revenue excluding North Sea 47,328 48,192 50,054 51,765 53,689 588,602 601,372 627,216 652,691 677,631
Of which: revenue accounting adjustments 3,754 3,844 3,979 4,042 4,295 41,321 42,522 44,112 45,426 47,530
Population share of North Sea revenue 917 519 395 186 6 10,957 6,234 4,764 2,252 76
Geographical share of North Sea revenue 9,633 5,306 3,999 1,802 60 10,957 6,234 4,764 2,252 76
Total revenue (incl pop share North Sea revenue) 48,245 48,712 50,449 51,951 53,695 599,559 607,606 631,980 654,943 677,707
Total revenue (incl geog share North Sea revenue) 56,961 53,498 54,053 53,567 53,748 599,559 607,606 631,980 654,943 677,707

Contact

Email: Mairi Spowage, economic.statistics@gov.scot