ICAS calls for greater public debate about public finances and tax
ICAS has said that policy and budgetary decisions in Scotland should be made clearer for the public to understand and with an emphasis on public debate and engagement about public finances and tax.
In its response to the Scottish Parliament’s Finance and Constitution Committee (F&CC) call for evidence regarding the 2021/22 Budget, ICAS notes that the Budget will need to manage the tensions arising from a desire to spend, but with less revenue with which to do so. And where any burdens fall (say, less spending and/or any tax increases) needs to be agreed and supported by the citizens of Scotland. It will also be set against the UK backdrop.
What is unique in Scotland is the number of moving components that make up the Scottish Budget and the need to manage these in the round. They are not easy to understand making accountability and public understanding more challenging.
The response states that a policy of openness and transparency “is critical in building trust in government, meeting stewardship duties and demonstrating accountability for decisions.”
A balance is needed
Covid-19 has dealt a blow to many sectors of Scotland’s economy. An equilibrium will be needed between:
- any “kneejerk” reaction to raise taxes to fund the extra borrowing arising from Covid-19,
- raising taxes to fund the inflationary element of existing public services, and
- the need to keep the tax burden manageable over 2021/22 to support the economy in order to get people back into employment and through Brexit.
Taxation needs to both collect funds and support the economy or, at the very least, not create economic disincentives or distort behaviour.
An opportunity to learn and collaborate
The unique and often unforeseen challenges created by the coronavirus pandemic have led to closer and stronger collaboration with the professional bodies and the accountancy profession.
“We hope this will continue as the focus shifts to rebuilding the economy because we believe it has been beneficial.”
Process around taxation
In response to the F&CC question regarding direct changes to the budget process, ICAS has noted that the pandemic has not created a need for new tax policy and legislative processes in Scotland – this need already existed. And it would be disappointing if the Covid-19 crisis delayed work in progression of new tax processes.
ICAS has also called for the Scottish Parliament to institute a Tax Committee to aid with scrutiny of tax policy.