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Scotland’s tax revenues have continued to increase over the past year, despite being impacted by the initial effects of coronavirus.
The Government Expenditure and Revenue Scotland (GERS) publication shows that overall revenues, including North Sea receipts, increased to a record £65.9bn. Onshore revenues grew by £1.1bn to reach £65.2bn.
These increases came despite the pandemic depressing public finances. Corporation and VAT receipts fell compared to the previous year and both the Scottish and UK Governments increased spending to tackle the virus.
As a result of this, plus a rise in UK Government spending on reserved matters, Scotland’s national onshore deficit – the difference between income and expenditure – rose 0.6% to 9.4% of GDP – the same rate of increase as the UK.
Adding North Sea revenues which totalled £724m – £642m less than in 2018-19 – the notional overall deficit stood at 8.6% of GDP.
Finance secretary, Kate Forbes, said the figures emphasised how Covid-19 had “fundamentally changed” the fiscal landscape.
Forbes said: “The Scottish Government has responded swiftly to the challenges of Covid-19 and has worked hard to protect Scotland’s economy, providing over £2.3 billion of support to businesses.
“The public finances were already facing challenges this year due to the uncertainty caused by Brexit. We are now witnessing an unprecedented health and economic crisis. Countries across the world, including the UK, have increased borrowing to record levels and, as we emerge from the pandemic, high fiscal deficits will inevitably be one of the consequences.”
She added: “That is why the UK Government should prioritise economic stimulus over austerity. I will also continue to press for the Scottish Government to be granted additional financial powers to enable us to tailor a response that meets Scotland’s needs.”
