A Scottish Tax and Benefit System: Opportunities and Constraints

Calls for Scottish independence, or greater fiscal autonomy, are often justified on the grounds that the Scottish electorate has a greater preference for more progressive, social democratic forms of welfare policy. This paper considers the evidence underpinning this claim, and examines the political economy factors that might influence the extent to which further devolution of fiscal levers to the Scottish Parliament will be possible, under different models of potential future constitutional change. Using a household level model of the Scottish economy, developed at the university of Stirling, the paper then seeks to understand the effectiveness of specific fiscal policy levers – relating both to personal taxation and welfare benefits – in influencing inequality, and incomes of specific groups in society. It discusses the constraints, both economic and political, that might influence the extent to which these fiscal levers might be exercised, under alternative models of constitutional change.