Publication - Consultation paper

Devolved taxes: policy framework consultation

Published: 14 Mar 2019
Financial Strategy Directorate
Part of:
Economy, Money and tax, Scottish Budget

Consultation on a new approach to the planning, management and implementation of the fully devolved taxes in Scotland.

27 page PDF

709.0 kB

27 page PDF

709.0 kB

Devolved taxes: policy framework consultation
3. Devolved Taxes Policy Framework

27 page PDF

709.0 kB

3. Devolved Taxes Policy Framework

A Devolved Taxes Policy Framework will be published to govern how changes to the fully devolved taxes will be proposed, consulted on, assessed and evaluated.  The Scottish Government will take a collaborative approach to developing this Framework, through this consultation and the planned events, and in its continued engagement with Revenue Scotland, the Scottish Fiscal Commission and professional bodies. 

The Devolved Taxes Policy Framework will set out a policy and legislative cycle through which changes to devolved taxes legislation will follow[8].  In establishing this cycle, the Scottish Government aims to ensure that:

  • its strategy and priorities in relation to tax are clear;
  • there is early and continuous consultation throughout the policy cycle;
  • stakeholders are encouraged to participate in the formulation of tax policy  and given clarity around when and how they can make representations;
  • tax changes are announced sufficiently in advance of when they will take effect, providing taxpayers and practitioners with certainty; and
  • legislation is reviewed post-implementation.

3.1 Domestic and international comparison

To help inform the work to develop the Framework, the Scottish Government has considered examples of tax policy in other English speaking jurisdictions, particularly those with similar parliamentary systems to Scotland.  In this respect, the Scottish Government has worked with the UK, Welsh, Irish and New Zealand Governments to learn from their experiences and build on the key features of their successes.

New Zealand
New Zealand's General Tax Policy Process ("GTTP") is often considered by tax commentators and academics as one of the most effective tax policy making frameworks in the world. A cornerstone of the GTPP is the open and collaborative relationship officials enjoy with taxpayers, businesses and the tax profession. As a result, the New Zealand public are generally well-informed on tax matters, including the process through which changes are made.

Key features:
- Participation of public and private-sector tax professionals in policy development.
- Good collaboration between Treasury and Inland Revenue.

The UK Government has followed a new approach to tax policy making since 2010. This approach has introduced an improved cyclical structure to the tax policy making process. It also commits the UK Government to publishing more detailed information on policy changes. For example, Tax Information and Impact Notes are now published to provide a more thorough explanation of the policy objectives.

Key features:
- Tax policy cycle means changes are announced at least 16 months before they come into effect. - Supporting material provides clear information on impacts and objectives.

The Welsh Government have a similar devolution settlement to Scotland in relation to taxation. Their Tax Policy Framework sets out the Welsh Government’s general approach to taxation, their strategic objectives and key challenges. The framework also summarises the policy process for taxation in Wales, including the approach to engagement and consultation.

Key feature:
- Future priorities in relation to tax are clear.

Republic of Ireland
Each year the Department of Finance hold a Tax Policy Conference to bring together senior policy makers, stakeholders and academics from Ireland and abroad, to discuss the challenges in key areas of tax policy. The Pre-Budget Submissions Process also allows special interest groups and members of the public to influence and inform tax policy. Indeed several measures that have been introduced via the budget process have come from members of the public through submissions as part of this consultation process.

Key features:
- Annual tax conference.
- Opportunity for stakeholders to influence and inform tax policy.