3 PUBLIC SECTOR REVENUE
This chapter provides detailed estimates of Scottish public sector revenue. As Chapter 4 discusses the treatment of North Sea revenue in detail, the focus of this chapter is on non-North Sea elements of 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 that revenue receivable from Scotland. GERS therefore uses a number of different methodologies to apportion revenue to Scotland. These methods are discussed in Annex B and in the detailed revenue methodology paper on the GERS website11.
GERS makes use of the best data sources and methodologies available and therefore represents as accurate a reflection of public sector revenue in Scotland as is currently possible. In some cases, a variety of methodologies could be applied, each leading to different estimates of public sector revenue in Scotland.
Estimated Revenue 2010-11
Table 3.1 highlights estimated public sector revenue in Scotland and the outturn data for the UK in 2010-11. The contribution of each element of taxation to the total estimated tax yield in Scotland, and the proportion of UK revenue raised in Scotland, are also included in the table.
On the basis of the assumptions and methodologies described in this report, in 2010-11, total public sector non-North Sea current revenue in Scotland was £45.2 billion. This is equivalent to 8.3 per cent of UK total non-North Sea current revenue which is broadly in line with Scotland's share of the UK population12.
|Scotland||UK||Scotland as % of UK|
|£ million||% of total non-North Sea revenue||£ million|
|Corporation tax (excl North Sea)||3,114||6.9%||34,661||9.0%|
|Capital gains tax||244||0.5%||3,589||6.8%|
|Other taxes on income and wealth||362||0.8%||6,177||5.9%|
|National insurance contributions||8,018||17.7%||97,755||8.2%|
|Betting and gaming and duties||113||0.3%||1,069||10.6%|
|Air passenger duty||183||0.4%||2,183||8.4%|
|Insurance premium tax||210||0.5%||2,511||8.4%|
|Climate change levy||61||0.1%||660||9.2%|
|Vehicle excise duty||470||1.0%||5,789||8.1%|
|Other taxes, royalties and adjustments2||694||1.5%||8,073||8.6%|
|Interest and dividends||183||0.4%||2,151||8.5%|
|Gross operating surplus||2,934||6.5%||25,371||11.6%|
|Rent and other current transfers||395||0.9%||1,711||23.1%|
|Total current revenue (excluding North Sea revenue)||45,177||100.0%||542,877||8.3%|
|North Sea revenue3|
|Per capita share||736||8,786||8.4%|
|Total current revenue (including North Sea revenue)|
|Per capita share||45,914||551,663||8.3%|
1. Excludes non-domestic rates that local authorities pay themselves.
2. Although this group includes some 11 separate revenues (as set out in the detailed methodology paper on the GERS website), the two largest - TV Licences and National Lottery Distribution Fund - account for 65 per cent (£448 million) of this estimate for Scotland. This group also contains a small accounting adjustment to align the revenue estimates to those in the January 2012 UK Public Sector Finances Statistical Bulletin. This adjustment is apportioned to Scotland on the basis of Scotland's share of total onshore UK tax revenue.
3. A full discussion of North Sea revenue is provided in Chapter 4.
Income tax was the single largest source of public sector revenue in Scotland. In 2010-11, income tax revenue was estimated at £10.6 billion - approximately a quarter of all public sector revenue in Scotland (excluding revenues from the North Sea).
VAT represented the second largest revenue source in Scotland, and was the largest source of revenue from indirect taxes, raising an estimated £8.6 billion in 2010-11 - 18.9 per cent of total non-North Sea revenues. National insurance contributions represented the third largest source of revenue, accounting for 17.7 percent of total non-North Sea revenues.
Corporation tax (excluding that from the North Sea) represented the fourth largest revenue source in Scotland in 2010-11 with receipts of £3.1 billion. This was equivalent to 6.9 per cent of total non-North Sea current revenue13.
Gross operating surplus (GOS) refers to the operating (or trading) surpluses (or losses) of central government, local government and public corporation trading activity. It was the fifth largest revenue source in Scotland during 2010-11, generating £2.9 billion in revenue, 6.5 per cent of total non-North Sea revenue in Scotland.
Scotland accounted for 11.6 per cent of the total UK GOS in 2010-11. Scotland's relatively large share of the UK GOS is partly due to Scottish Water which is one of the greatest contributors to UK public corporations' GOS. The equivalent water companies in England and Wales are outside the public sector and hence do not contribute to their GOS14.
After these five main categories, all other types of tax listed each individually accounted for less than 5 per cent of total non-North Sea revenue in Scotland in 2010-11, with the exception of fuel duty, which raised £2.3 billion or 5.2 per cent. Together, council tax and non-domestic rates raised £3.9 billion (8.6 per cent of total non-North Sea revenue).
The Scottish share of total UK revenue for each element of revenue varies according to the particular tax being estimated. For income tax, Scotland's share of UK revenue was lower than its share of the UK population. For national insurance contributions, Scotland's share of UK revenues was broadly in line with its per capita share. For VAT and corporation tax (excluding North Sea), Scotland's share of UK revenue was slightly higher than its share of the UK population. Revenue from duties on betting and gaming, alcohol and tobacco were also higher than Scotland's share of the UK population.
Table 3.2 shows estimates of Scotland's share of UK revenue for five key taxes between 2006-07 and 2010-11. In each year during this period, total non-North Sea revenue in Scotland has accounted for 8.3 per cent of UK non-North Sea revenue, broadly in line with Scotland's share of the UK population.
|(per cent of UK revenue)|
|Corporation tax (excluding North Sea revenue)||8.7%||8.7%||8.7%||8.9%||9.0%|
|National Insurance contributions||8.0%||8.2%||8.3%||8.1%||8.2%|
|Value added tax||8.7%||8.8%||8.7%||8.7%||8.8%|
|Local authority revenue1||8.5%||8.3%||7.9%||7.9%||8.0%|
|All other revenue||9.1%||9.2%||9.4%||9.4%||9.3%|
|Total non-North Sea current revenue||8.3%||8.3%||8.3%||8.3%||8.3%|
1. Council tax and non-domestic rates
Box 3.1 - Stamp Duty
Stamp duty is levied on two types of transactions - i) conveyances and transfers of land and property (stamp duty land tax) and ii) share and marketable security transactions (stamp duty reserve tax). The revenue raised from both sources is reported jointly as a consolidated estimate in Table 3.1. The tables below provide further information on the revenue raised by each element.
Stamp Duty Reserve Tax: 2006-07 to 2010-11
Stamp Duty Land Tax: 2006-07 to 2010-11
Estimated Revenue: Scotland and the UK, 2006-07 to 2010-11
Table 3.3 shows estimated current revenue in Scotland and the UK between 2006-07 and 2010-11. Current non-North Sea revenue in Scotland is estimated to have grown by 6.9 per cent between 2006-07 and 2010-11 in nominal terms, compared to 6.4 per cent in the UK as a whole. However, the effect of the recession on public finances is clearly visible, with non-North Sea revenues falling in both Scotland and the UK during 2008-09 and 2009-10. However, receipts recovered in 2010-11 and grew to exceed their 2007-08 pre-recession peak in cash terms.
|Corporation tax (excl North Sea)||3,254||3,525||2,841||2,678||3,114||37,307||40,384||32,493||29,968||34,661|
|Capital gains tax||204||341||589||135||244||3,812||5,267||7,851||2,504||3,589|
|Other taxes on income and wealth||258||246||249||213||362||2,970||2,717||2,741||2,360||6,177|
|National insurance contributions||7,303||7,841||7,990||7,819||8,018||90,916||95,437||96,613||96,638||97,755|
|Betting and gaming and duties||107||109||104||109||113||961||961||994||1,029||1,069|
|Air passenger duty||94||164||154||157||183||1,112||1,949||1,835||1,870||2,183|
|Insurance premium tax||195||194||191||190||210||2,304||2,302||2,271||2,261||2,511|
|Climate change levy||63||65||65||62||61||696||705||711||687||660|
|Vehicle excise duty||411||436||458||466||470||5,139||5,412||5,602||5,692||5,789|
|Other taxes, royalties and adjustments||511||569||601||695||694||5,688||6,239||6,830||8,014||8,073|
|Interest and dividends||564||767||606||206||183||6,605||8,942||7,069||2,410||2,151|
|Gross operating surplus||2,528||2,624||2,739||2,722||2,934||22,247||23,074||23,392||23,697||25,371|
|Rent and other current transfers||397||393||416||397||395||1,721||1,675||1,933||1,723||1,711|
|Total current revenue |
(excluding North Sea revenue)
|North Sea revenue|
|Per capita share||754||629||1,087||545||736||8,924||7,464||12,925||6,491||8,786|
|Total current revenue (including North Sea revenue)|
|Per capita share||43,026||45,796||44,479||42,462||45,914||519,184||548,899||532,730||513,338||551,663|
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