Publication - Statistics

Government Expenditure and Revenue Scotland 2010-2011

Published: 7 Mar 2012
ISBN:
9781780457055

Government Expenditure and Revenue Scotland (GERS) is a National Statistics publication. It estimates the contribution of revenue raised in Scotland toward the goods and services provided for the benefit of Scotland. The estimates in this publication are consistent with the UK Public Sector Finance Statistics published in January 2012.

Government Expenditure and Revenue Scotland 2010-2011
B REVENUE METHODOLOGY

B REVENUE METHODOLOGY

This annex outlines the methodologies used to estimate public sector revenue in Scotland. As the issue of North Sea revenue has been discussed extensively in Chapter 4, this annex focuses on all other elements of public sector revenue.

In contrast to public sector expenditure, there is no one generic approach to estimating public sector revenue in Scotland; instead each revenue stream is estimated using a separate methodology. This annex discusses these techniques. It should be noted that, as the underlying datasets used in GERS have been subject to revision and update, estimates may differ from previous editions of GERS even if the methodology has remained unchanged.

Methodology

As highlighted in Chapter 3, the vast majority of public sector revenue raised in Scotland is collected at the UK level by HM Revenue and Customs.

In some cases, revenue figures can be obtained for Scotland directly. Examples include local government revenue and particular elements of public corporation revenue. Such revenues are the exception and separate identification of most other revenue streams for Scotland is not possible. GERS therefore uses a number of different methodologies to apportion revenue to Scotland. In doing so, there are often theoretical and practical challenges in determining an appropriate share to allocate to Scotland. In certain cases, a variety of alternative methodologies could be applied each leading to different estimates.

Obtaining an estimate of public sector revenue in Scotland is a two-stage process.

In the first stage, the UK outturn figure for each element of revenue is obtained from ONS Public Sector Finance Statistics. In the second stage, Scotland's share of the UK figure is estimated according to a specific apportionment methodology. The methodology used differs for each element of revenue. The detailed Revenue Methodology paper on the GERS website contains a discussion of the apportionment methodology used for each revenue stream and highlights the sensitivity of the results to changes in the underlying assumptions24.

UK Revenue Figures

The basis for estimating public sector revenue for Scotland is National Statistics outturn figures for UK fiscal revenue taken from ONS Public Sector Finance Statistics. The detailed components, revenue by revenue, are taken from an ONS database (PSAT2) which is produced on a quarterly basis. The fiscal balance calculations in GERS are constrained to the UK Public Sector Finances published in January 2012. An accounting adjustment is applied to both the expenditure and revenue totals so that both sides of the fiscal balance calculations are presented on a consistent basis. The revenue accounting adjustment is very small and has been included in 'other taxes, royalties and adjustments'.

These data are presented on an accruals basis and separately identify revenue attributed to central government, local government and public corporations. The international standards for National Accounts and Government Finance Statistics use the accruals basis rather than a cash approach. This is because accruals accounting reflects a more accurate picture of when revenue is due and spending occurs than the more volatile alternative of cash, which, for example, records when bills are settled rather than when the expenditure occurs.

Summary of Apportionment Methodologies

Table B.1 provides a summary of the apportionment methodologies used for each element of revenue and highlights whether or not the methodology has changed since the previous edition of GERS.

In some instances ONS's Public Sector Finance estimates of UK revenue for some taxes have also been revised since the last edition of GERS, these changes will affect the estimates of Scottish tax revenue. In addition, there have been revisions to some of the data sources used to apportion tax revenues to Scotland. This means that there have been small changes in the share of some UK taxes apportioned to Scotland since GERS 2009-10.

More detailed information on the methodologies used and the changes introduced can be found in the Revenue Methodology paper on the GERS website.

Table B.1: Apportionment Methodologies and Sources for Public Sector Revenue in Scotland (Excluding North Sea Revenue)

Revenue

Apportionment Methodology

Source

Revised

Income tax

Scottish share of UK income tax liabilities applied to income tax gross of tax credits. Negative expenditure on tax credits estimated using Scot/UK share of overall spend on tax credits (negative tax plus benefits)

Survey of Personal Income (SPI): HMRC and Scottish Government analysis

Data on overall spend on tax credits: HMRC

No

Corporation tax (excl. North Sea)

Scotland's share of profits (less holding gains) of UK corporations

Regional Accounts: ONS

No

Capital gains tax

Actual outturns for Scotland

Supplied directly by HMRC

No

Other taxes on income and wealth

Various (see web annex)

Various (see web annex)

No

National insurance contributions

Estimates of employer, employee, class 2 and class 3 NIC revenue in UK and Scotland

Supplied directly by HMRC

No

VAT

VAT net of LG and CG refunds: Scotland's share of UK household VAT expenditure

Living Costs and Food Survey: ONS

No

LG refunds: Scotland's share of UK LG current expenditure on goods and services

Public Sector Finances: ONS

CG Refunds - MOD: Scotland/UK populations

ONS and GROS

- NHS: Scotland/UK TES for Health

PESA

- Other Gov depts: Scotland/UK total TES (Excluding NHS/MOD)

PESA

Fuel duties

Scotland's share of road traffic fuel consumption

Fuel consumption statistics: DECC

No

Stamp duties

Land and property stamp duty: Actual outturns for Scotland

Land and property stamp duty: HMRC

No

Stocks and shares: - Scotland/UK ratio of adults owning shares

Stocks and shares: Family Resources Survey (DWP)

Tobacco duties

Spend on tobacco in Scotland/UK

Living Costs and Food Survey: ONS

No

Alcohol duties

Spend on alcohol in Scotland/UK

Living Costs and Food Survey: ONS

No

Betting and gaming duties

Spend on betting and gaming in Scotland/UK

Living Costs and Food Survey: ONS

No

Air passenger duty

Scotland/UK population

ONS and GROS

No

Insurance premium tax

Scotland/UK population

ONS and GROS

No

Landfill tax

Scotland's share of UK tonnage of waste sent to landfill

Scottish Environment Protection Agency, Environment Agency, Dept. of Environment in Northern Ireland

No

Climate change levy

Electricity: Scotland's share of UK electricity consumption by commercial and industrial users

Electricity: DECC

No

Gas: Scotland's share of UK gas sales to commercial and industrial users

Gas: DECC

Solid and other fuels: Scotland's share of UK (less extra-regio) GVA

Solid and other fuels: Regional Accounts: ONS

Aggregates levy

Scotland's share of UK's aggregate production

United Kingdom Minerals Yearbook 2010: British Geological Survey

No

Inheritance tax

Actual outturns for Scotland

Supplied directly by HMRC

No

Vehicle excise duty

Scotland's share of total value of UK vehicle licences issued (less refunds)

DVLA

No

Non-domestic rates

Actual Data

Scottish Local Government Finance Statistics

No

Council tax

Actual Data

Scottish Local Government Finance Statistics

No

Other taxes, royalties and adjustments

Various (see web annex)

Various (see web annex)

No

Interest and dividends

For PC receipts: Scotland's share of public sector UK GVA

For LG and CG receipts: Scotland/UK population

Regional Accounts: ONS

No

Gross operating surplus

CG: Scottish/UK share of central government NMCC

CG: ONS Regional Accounts

No

LG: Scottish/UK share of local government NMCC

LG: ONS Regional Accounts

Public corporations - individual data for Scottish PCs - data for UK-wide PCs based on relevant industry GVA - and actual data for Local Authority housing rentals

PC: Supplied by Public Sector Finance team: ONS, and Regional Accounts: ONS

Rent and other current transfers (excluding oil royalties and licence fees)

Various (see web annex)

Various (see web annex)

No

North Sea revenue

See Chapter 4

See Chapter 4

Table B.2 summarises the revisions in this edition of GERS by comparing the estimates contained in this report with last year's publication. Overall, estimated public sector revenue in Scotland for the years 2007-08 and 2008-09 has been revised upwards by 0.3 per cent and 0.6 per cent respectively. The estimate of public sector revenue for Scotland in 2009-10 has been revised down by 0.7 per cent. The 2006-07 estimate is unchanged.

Table B.2: Revision to Estimates of Total Non-North Sea Public Sector Revenue: 2006-07 to 2009-10

(£ million)
2006-07 2007-08 2008-09 2009-10
Scotland        
Estimates published in GERS 08-09 42,272 45,031 43,131 42,201
Estimates published in GERS 09-10 42,272 45,167 43,391 41,916
Revision 0 136 260 -285
UK        
Estimates published in GERS 08-09 510,260 541,367 520,310 506,669
Estimates published in GERS 09-10 510,260 541,435 519,805 506,847
Revision 0 68 -505 178
Scotland/UK ratio        
Estimates published in GERS 08-09 8.3% 8.3% 8.3% 8.3%
Estimates published in GERS 09-10 8.3% 8.3% 8.3% 8.3%
Revision (% point) 0.0% 0.0% 0.1% -0.1%

Table B.3 illustrates the revisions to individual public sector revenue streams in Scotland and the UK for 2009-10. The revisions to the UK revenue estimates and to the underlying data used to apportion some taxes to Scotland, have resulted in minor revisions to some revenue estimates. The net effect of all of the changes has been to reduce the estimate of public sector revenue in Scotland by £285 million and to increase the estimate of UK tax revenue by £178 million.

Table B.3: Revision to Estimates of Public Sector Revenue: Scotland and UK 2009-10

(£ million)
Scotland UK
Income tax -286 -349
Corporation tax (excluding North Sea) 81 0
Capital gains tax -39 0
Other taxes on income and wealth 3 13
National insurance contributions -178 0
VAT -37 94
Fuel duties 23 0
Stamp duties 9 0
Tobacco duties -5 0
Alcohol duties 68 0
Betting and gaming and duties 0 0
Air passenger duty 0 0
Insurance premium tax 0 -1
Landfill tax -8 -2
Climate change levy 1 0
Aggregates levy 10 0
Inheritance tax 0 0
Vehicle excise duty 20 108
Non-domestic rates -1 47
Council tax 0 126
Other taxes, royalties and adjustments 36 224
Interest and dividends -25 -216
Gross operating surplus 37 49
Rent and other current transfers 5 85
Revision -285 178

Revisions to previously published estimates are relatively small and largely explained by revisions to the UK constraining totals for each revenue stream. The incorporation of revised estimates of Scottish sectoral Gross Value Added from Regional Accounts explains the revisions to corporation tax and 'other taxes, royalties and adjustments'. Revised estimates of Household Consumption in Scotland from the Living Costs and Food Survey have led to revisions to VAT and duties levied on the consumption of fuel, tobacco and alcohol.


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