Devolved taxes: a policy framework - consultation analysis

1. Executive Summary

The Scottish Government's 2018/19 Programme for Government included a commitment to establishing a more strategic and structured approach to the planning, management and implementation of devolved taxation.^[1]

On 14 March 2019 we launched the 'Devolved taxes: a policy framework' consultation, which set out proposals for a new process of engagement, development and delivery of the devolved taxes in Scotland.^[2]

The consultation closed on 6 June 2019 and we received 25 responses. Eight of the responses were from individuals and 17 were from organisations. A list of respondent organisations and links to their responses is available in Annex A.

The responses to the consultation will help to shape the future approach to devolved taxes. The proposals, as informed by the responses, are intended to bring greater certainty, transparency and efficiency to the tax policy making process.

Summary of responses

The consultation asked seven questions which can be broadly separated into two categories:

• The Scottish Government’s proposed approach to engagement and consultation on devolved taxation; and
• An indicative policy and legislative cycle through which changes to the fully devolved taxes will follow.

There was broad support from respondents for the proposed methods of engagement, including an annual tax event, and a strong desire for more regular engagement on tax matters and for this engagement to take place through different channels, including the use of social media. There were mixed responses on the preferred type of formal consultation, however there was broad support for the provision of detailed information relating to the intention and impacts of policy in the documents that accompany legislation. The main theme running through these responses was the desire for openness and transparency, through regular and meaningful engagement throughout the policy and legislative cycle and the provision of full, detailed and accessible information.

Respondents were also supportive of the proposed policy and legislative cycle for the devolved taxes, particularly the inclusion of a 'post-implementation review' phase and the certainty provided for by a regular cycle. There were mixed views on how frequently the cycle should occur with arguments set out for both an annual and biennial process. Finally, there was a general acceptance amongst respondents of the need for exceptions and flexibility in developing tax legislation, meaning that in some cases it may be necessary to make changes immediately or following a shorter timescale. The main themes running throughout these responses were the importance of a regular cycle ensuring clarity and certainty in the tax system and providing for opportunities to review and amend legislation at appropriate times.

Next Steps

The next steps the Scottish Government will take in relation to engagement and consultation will include planning a conference on taxation in 2020, holding a series of roundtable events on tax with business and trade associations, tax and legal professionals, and research institutes and making more use of social media to promote the awareness of devolved taxes.

In addition, the Devolved Taxes Legislation Working Group (the Group) has been convened to consider a number of legislative options for devolved tax legislation. The Groups recommendations on legislation will feed directly into the policy and legislative cycle which has been consulted upon. The timescales for both strands of work therefore have to align. The Group aims to publish an interim report in early 2020, and then to conclude by summer 2020. At this point the Scottish Government will publish the finalised Devolved Taxes Policy Framework incorporating the responses from this consultation and the conclusions of the Group.