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Government Expenditure & Revenue Scotland 2014-15

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 Finances published in January 2016.

This document is part of a collection


Chapter 1: Public Sector Revenue

Total Public Sector Revenue: Scotland 2014-15

Total Public Sector Revenue: Scotland 2014-15

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 that 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.[8]

Following the implementation of the Scotland Act 2012 and the recommendations of the Smith Commission, 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. Revenues associated with these taxes are presented in Summary Table J of Quarterly National Accounts Scotland and will be presented in GERS 2015-16.[9] Supplementary tables in Annex A provide more information on current and proposed 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. As discussed in the Preface, HMRC publish estimates of the taxes they collect for the four countries in the UK. Box 1.1 compares the HMRC estimates for Scotland with those in this publication.

Estimated Revenue 2014-15

Table 1.1 highlights estimated public sector revenue in Scotland and the outturn data for the UK in 2014-15. 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.

On the basis of the assumptions and methodologies described in this report, total public sector non-North Sea current revenue in Scotland was estimated to be £51.6 billion in 2014‑15. This is equivalent to 8.0% of UK total non-North Sea current revenue which is broadly in line with Scotland's share of the UK population.[10] 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.

Gross operating surplus (GOS) is the operating (or trading) surpluses (or losses) of public bodies. It was the fourth largest revenue source in Scotland during 2014-15, and Scotland is estimated to generate approximately 9.8% of UK GOS. Scotland's relatively large share of UK GOS is primarily due to 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.[11]

Table 1.1: Current Revenue: Scotland and UK 2014-15

Scotland UK Scotland as % of UK
£million % of total non-North Sea revenue £ million
Income tax 11,735 22.7% 162,342 7.2%
Corporation tax (excluding North Sea) 2,920 5.7% 39,987 7.3%
Capital gains tax 293 0.6% 5,559 5.3%
Other taxes on income and wealth 215 0.4% 2,654 8.1%
National insurance contributions 8,969 17.4% 110,260 8.1%
VAT 10,734 20.8% 124,846 8.6%
Fuel duties 2,294 4.4% 27,155 8.4%
Stamp duties 735 1.4% 13,779 5.3%
Tobacco duties 1,211 2.3% 9,251 13.1%
Alcohol duties 961 1.9% 10,449 9.2%
Betting and gaming duties 185 0.4% 1,776 10.4%
Air passenger duty 309 0.6% 3,205 9.7%
Insurance premium tax 206 0.4% 2,973 6.9%
Landfill tax 147 0.3% 1,125 13.0%
Climate change levy 163 0.3% 1,626 10.0%
Aggregates levy 54 0.1% 357 15.1%
Inheritance tax 229 0.4% 3,879 5.9%
Vehicle excise duty 456 0.9% 5,910 7.7%
Non-domestic rates1 1,915 3.7% 26,161 7.3%
Council tax 2,008 3.9% 28,304 7.1%
Other taxes, royalties and adjustments2 1,451 2.8% 16,322 8.9%
Interest and dividends 374 0.7% 5,761 6.5%
Gross operating surplus 3,685 7.1% 37,693 9.8%
Rent and other current transfers 390 0.8% 4,390 8.8%
Total current revenue (excluding North Sea revenue) 51,639 100.0% 645,764 8.0%
North Sea Revenue
Population share 187 2,254 8.3%
Geographical share 1,804 2,254 80.0%
Total current revenue (including North Sea revenue)
Population share 51,826 648,018 8.0%
Geographical share 53,443 648,018 8.2%

1. Excludes non-domestic rates that local authorities pay themselves.

2. This group includes some 11 separate revenues (as set out in the detailed methodology paper on the GERS website). The largest revenue is from Renewable Energy Obligation certificates, which is an imputed tax from electricity suppliers. This accounted for an estimated £364 million of the revenue. It is also included as an imputed expenditure, and so has no impact on the current budget or net fiscal balances for Scotland. This group also includes TV Licences and National Lottery Distribution Fund revenue, which together account for a further £460 million of this estimate for Scotland. It also contains a small accounting adjustment to align the revenue estimates to those in the January 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.

Scotland tends to have relatively high shares of duties associated with tobacco and alcohol. This reflects the greater incidence of smoking in Scotland, [12] and also the fact that Scotland has higher consumption of spirits than the rest of the UK.[13]

Note that, for most consumption taxes, Scotland's estimated share of UK revenue is based upon data relating to UK residents. This is because there is a lack of data on taxes paid by tourists. As such, GERS assigns Scotland a share of consumption receipts from tourists, in proportion to Scotland's share of UK domestic household consumption.

Table A.12 in Annex A provides analysis of the confidence intervals around revenue estimates based on survey data.

Table 1.2: Non-North Sea Current Revenue: Scotland as share of UK

(per cent of UK revenue)
2010-11 2011-12 2012-13 2013-14 2014-15
Income Tax 7.2% 7.4% 7.3% 7.2% 7.2%
Corporation tax (excl North Sea) 7.4% 7.3% 7.3% 7.2% 7.3%
National insurance contributions 8.2% 8.1% 8.1% 8.1% 8.1%
VAT 8.5% 8.5% 8.5% 8.6% 8.6%
Local authority revenue 7.4% 7.4% 7.4% 7.1% 7.1%
All other revenue 8.8% 8.8% 8.8% 8.7% 8.5%
Total current non-North Sea revenue 8.1% 8.1% 8.1% 8.1% 8.0%

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, which is currently consulting on the production of estimates of public sector revenue for each of the Countries and Regions of the UK as part of wider work on public sector finances. The consultation is available at https://www.ons.gov.uk/aboutus/whatwedo/statistics/consultationsandsurveys/allconsultationsandsurveys/consultationoncountryandregionalpublicsectorfinances

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 VAT 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. Estimates of VAT and corporation tax have been more closely aligned in this year's GERS publication. While some differences remain, the aim is to ensure a clar understanding eof 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 2013-14 and 2014-15, the difference in onshore revenue is almost entirely due to differences in estimates of VAT. This difference arises from GERS having incorporated the 2013 data from Family Spending published in December 2015, which showed an increase in Scotland's share of UK household spending, and which was not available to HMRC for their October publication.

Estimates of Total Scottish Revenues 2010-11 to 2014-15

£ million
2010-11 2011-12 2012-13 2013-14 2014-15
Cash estimates: onshore revenues
GERS 45,530 47,246 48,276 50,051 51,639
HMRC 1 45,810 47,091 48,050 49,865 51,384
Difference -280 155 226 185 255
Difference (% GDP) -0.2% 0.1% 0.2% 0.1% 0.2%
Cash estimates: geographical share of North Sea revenues
GERS 7,466 9,633 5,289 3,999 1,804
HMRC1 7,202 9,055 4,872 3,793 1,679
Difference 263 578 417 206 125
Difference (% GDP) 0.2% 0.4% 0.3% 0.1% 0.1%
Share of UK total: onshore revenues
GERS 8.1% 8.1% 8.1% 8.1% 8.0%
HMRC1 8.1% 8.1% 8.1% 8.0% 8.0%
Difference (% point) 0.0% 0.0% 0.0% 0.0% 0.0%
Share of UK total: geographical share of North Sea revenues
GERS 88.9% 87.9% 85.1% 84.0% 80.0%
HMRC 85.7% 82.6% 78.4% 79.6% 74.5%
Difference (% point) 3.1% 5.3% 6.7% 4.3% 5.5%

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, 2010-11 to 2014-15

Table 1.4 overleaf shows estimated current revenue in Scotland and the UK between 2010‑11 and 2014-15. Current non-North Sea revenue in Scotland is estimated to have grown by 13.4% between 2010‑11 and 2014-15 in nominal terms, less than for the UK as a whole (14.3%). This 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 2010-11 and 2014‑15. Excluding North Sea revenue, revenue per person in Scotland is lower than in the UK by approximately £200 to £400 per year. Including an illustrative geographical share of North Sea revenue, revenue per person in Scotland is slightly lower than the UK average in 2014-15, but with the difference not notable when rounded to the nearest £100. In earlier years, Scottish revenue per person including North Sea revenue has been higher than in the UK as a whole, with the difference being quite variable.

Table 1.3: Current Revenue Per Person: Scotland and UK 2010-11 to 2014-15

2010-11 2011-12 2012-13 2013-14 2014-15
Scotland
Excluding North Sea revenue 8,600 8,900 9,100 9,400 9,600
Including North Sea revenue (population share) 8,800 9,100 9,200 9,500 9,700
Including North Sea revenue (geographical share) 10,100 10,700 10,100 10,100 10,000
UK
Excluding North Sea revenue 9,000 9,200 9,300 9,700 10,000
Including North Sea revenue 9,100 9,400 9,400 9,700 10,000
Difference (Scotland minus UK)
Excluding North Sea revenue -400 -300 -200 -300 -400
Including North Sea revenue (population share) -300 -300 -200 -200 -300
Including North Sea revenue (geographical share) 1,000 1,300 700 400 0

1 Figures rounded to nearest £100

Table 1.4: Current Revenue: Scotland and UK 2010-11 to 2014-15

(£ million)
Scotland UK
2010-11 2011-12 2012-13 2013-14 2014-15 2010-11 2011-12 2012-13 2013-14 2014-15
Income tax 11,012 11,127 11,022 11,277 11,735 152,167 151,262 150,713 156,009 162,342
Corporation tax (excluding North Sea) 2,598 2,424 2,551 2,566 2,920 35,134 33,207 34,958 35,651 39,987
Capital gains tax 201 277 321 240 293 3,590 4,336 3,926 3,907 5,559
Other taxes on income and wealth 337 238 253 329 215 6,050 2,901 3,121 4,119 2,654
National insurance contributions 7,968 8,270 8,501 8,730 8,969 97,747 101,597 104,483 107,306 110,260
VAT 8,507 9,517 9,754 10,368 10,734 99,523 112,067 114,465 120,215 124,846
Fuel duties 2,304 2,259 2,240 2,271 2,294 27,256 26,798 26,571 26,881 27,155
Stamp duties 577 511 464 662 735 8,931 8,919 9,140 12,481 13,779
Tobacco duties 1,058 1,208 1,278 1,242 1,211 9,305 9,878 9,590 9,556 9,251
Alcohol duties 913 969 946 972 961 9,434 10,180 10,139 10,308 10,449
Betting and gaming duties 98 122 122 173 185 1,069 1,221 1,228 1,645 1,776
Air passenger duty 185 228 243 273 309 2,183 2,637 2,818 3,003 3,205
Insurance premium tax 174 204 202 211 206 2,509 3,002 3,033 3,018 2,973
Landfill tax 129 131 139 150 147 1,094 1,075 1,116 1,179 1,125
Climate change levy 61 63 61 117 163 660 678 663 1,200 1,626
Aggregates levy 55 48 43 43 54 294 283 261 294 357
Inheritance tax 175 170 175 210 229 2,722 2,955 3,150 3,541 3,879
Vehicle excise duty 470 477 481 488 456 5,789 5,930 6,003 6,121 5,910
Non-domestic rates 1,863 1,954 1,930 1,927 1,915 22,664 23,934 25,031 25,756 26,161
Council tax 1,904 1,917 1,935 1,957 2,008 25,706 25,925 26,285 27,533 28,304
Other taxes, royalties and adjustments 874 1,033 1,182 1,305 1,451 9,668 11,911 13,556 14,492 16,322
Interest and dividends 419 444 416 404 374 5,163 5,611 5,446 5,664 5,761
Gross operating surplus 3,522 3,532 3,705 3,846 3,685 34,673 35,455 36,968 37,643 37,693
Rent and other current transfers 124 124 309 288 390 1,501 1,505 3,635 3,331 4,390
Total current revenue (excluding North Sea revenue) 45,530 47,246 48,276 50,051 51,639 564,832 583,267 596,299 620,853 645,764
North Sea revenue
Population share 704 917 518 395 187 8,402 10,957 6,215 4,764 2,254
Geographical share 7,466 9,633 5,289 3,999 1,804 8,402 10,957 6,215 4,764 2,254
Total current revenue (including North Sea revenue)
Population share 46,234 48,162 48,794 50,446 51,826 573,234 594,224 602,514 625,617 648,018
Geographical share 52,996 56,878 53,565 54,050 53,443 573,234 594,224 602,514 625,617 648,018

Box 1.2: Comparison of Scottish revenue estimates with other parts of the UK (Experimental Statistics)

The chart below provides experimental estimates of public sector receipts for each of the UK countries and regions using the GERS methodology. Full details of the methodology is available on the GERS website: http://www.gov.scot/Topics/Statistics/Browse/Economy/GERS/RelatedAreas

We welcome user feedback about this analysis, including comments on the methods used. Please feedback to economic.statistics@gov.scot.

The chart below shows estimates of public sector revenue per person for each of the UK countries and regions relative to the UK average. Scotland is estimated to raise the joint fourth most onshore revenue per person of the UK countries and regions. When an illustrative geographical share of North Sea revenue is included, revenue per person in Scotland is estimated to be the fourth highest of the UK countries and regions, behind London, the South East, and East England. Scotland and Northern Ireland have some revenue associated with the gross operating surpluses of their public sector water and sewerage bodies.

The ONS is currently consulting on the production of Public Sector Finance statistics for the Countries and Regions of the UK. The consultation is available at https://www.ons.gov.uk/aboutus/whatwedo/statistics/consultationsandsurveys/allconsultationsandsurveys/consultationoncountryandregionalpublicsectorfinances

Revenue per person, 2014-15

Revenue per person, 2014-15

Note: Relative revenue per person when a population share of the North Sea is assigned to each country and region is the same as onshore revenue.

Contact

Email: Mairi Spowage

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