Chapter 1: Public Sector Revenue
Total Public Sector Revenue: Scotland 2014-15
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.
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. 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. 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.
Table 1.1: Current Revenue: Scotland and UK 2014-15
|Scotland||UK||Scotland as % of UK|
|£million||% of total non-North Sea revenue||£ million|
|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%|
|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%|
|Climate change levy||163||0.3%||1,626||10.0%|
|Vehicle excise duty||456||0.9%||5,910||7.7%|
|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|
|Total current revenue (including North Sea revenue)|
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,  and also the fact that Scotland has higher consumption of spirits than the rest of the UK.
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)|
|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%|
|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%|
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
|Cash estimates: onshore revenues|
|Difference (% GDP)||-0.2%||0.1%||0.2%||0.1%||0.2%|
|Cash estimates: geographical share of North Sea revenues|
|Difference (% GDP)||0.2%||0.4%||0.3%||0.1%||0.1%|
|Share of UK total: onshore revenues|
|Difference (% point)||0.0%||0.0%||0.0%||0.0%||0.0%|
|Share of UK total: geographical share of North Sea revenues|
|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
|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|
|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
|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|
|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|
|Climate change levy||61||63||61||117||163||660||678||663||1,200||1,626|
|Vehicle excise duty||470||477||481||488||456||5,789||5,930||6,003||6,121||5,910|
|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|
|Total current revenue (including North Sea revenue)|
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 firstname.lastname@example.org.
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
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.
Email: Mairi Spowage
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