The Chartered Institute of Taxation (CIOT) and the Institute of Chartered Accountants of Scotland (ICAS) have also called for increased scrutiny of tax by MSPs with the introduction of an equivalent to the Westminster Finance Bill, which would make changes to the tax system easier and more visible.
They also recommend removing the constitutional remit from the Parliament’s finance committee to enable it to spend more time scrutinising tax policy and say there should be limited use of Holyrood’s tax powers for “last minute budget concessions” and the development of a longer-term approach to tax policy.
Better budget coordination between the Scottish and UK governments to overcome budget delays which have ‘cut across the devolution settlement’ are also needed, according to the bodies, as is improved public awareness and understanding of the Scottish tax regime, including promoting tax education in the Scottish curriculum.
The organisations make the call in a new paper, Building a Better Tax System, after a recent poll found that 33 per cent of Scots said they were unaware that the Scottish Parliament had made changes to the tax system since 2015 and 26 per cent said they were ‘not aware’ the Scottish Parliament even had the power to make changes to income tax rates.
Further, only 27 per cent knew that income tax powers are shared between the Scottish and UK parliaments, a fall of four points since the survey was first conducted in 2018.
The survey also found that 25 per cent were unaware of Holyrood’s powers over council tax, business rates and Land and Buildings Transaction Tax, and 83 per cent think they need better information about how taxes are decided in Scotland.
The poll of 1,098 adults in Scotland was undertaken by the Diffley Partnership in March 2021, and was the third to be commissioned by CIOT since the introduction of Scotland’s new income tax regime in 2018.
Alexander Garden, Chair of the CIOT’s Scottish Technical Committee, said: “As political parties set out how they plan to use Holyrood’s tax powers, it should be concerning that a third of respondents are unaware that the Scottish Parliament has made changes to the tax system in Scotland.
“The case for increased awareness has arguably been made stronger by the devolution and divergence that has taken place in recent years.
“As taxes account for a significant amount of money spent by Holyrood, it should be a priority of the next Scottish Parliament to ensure that taxpayers can understand more about Scotland’s tax powers and the changes that are being made in their names.”
And Charlotte Barbour, Director of Taxation at ICAS, added: “The reality is that at present, many of the day-to-day changes needed to maintain the integrity of the devolved tax system are either not happening, due to a lack of parliamentary time, or in a way that limits detailed scrutiny.
“Having an equivalent to the UK Finance Bill at Holyrood is one of the ways that awareness of Holyrood’s tax powers could be boosted, by making sure that tax policy is more visible in the Scottish political calendar.
“Increased awareness will become more important if discussions around the role of the Scottish tax system increase in prominence as we emerge from the pandemic.”
Mr Garden added: “We would like to see our MSPs taking a longer-term approach to thinking about how the Scottish tax system works.
“We need to move away from the recent trend that has seen new tax measures brought in at short notice with limited consultation in exchange for parliamentary votes, and towards an approach that focuses not just on new taxes, but on how we use those we already have more effectively.
“This should include better coordination between the Scottish and UK governments around the timing of future budgets. The delays to the last two UK Budgets have highlighted challenges for Holyrood when faced with the need to agree tax and spending plans without full sight of the UK picture. We hope that will change.”
Scottish Conservative finance spokesman Murdo Fraser said Holyrood had “a range of extensive tax related powers at it’s disposal, thanks to the UK government” but “it is clear there has been a substantial failure to properly inform taxpayers about how decisions on taxes are now being made in Scotland.
“There must be a renewed effort whatever the make-up of the next Parliament to enhance scrutiny and improve awareness around the tax related decisions being made in Holyrood.”
A spokesperson for the SNP said: “We agree the UK government must overcome recent budget delays that have caused unnecessary uncertainty for the Scottish taxpayers.
“However, despite the delays from Westminster, the SNP has ensured Scotland has the fairest, most progressive income tax in the UK, with a majority of taxpayers paying less than if they lived in England, Wales or Northern Ireland.
“But it is only with the full tax powers of independence that we will be able to protect public services, put money in people's pockets and secure a strong economic recovery. That’s why it must be #BothVotesSNP on May 6th.”
However Scottish Labour finance spokesperson Daniel Johnson said the findings were “hardly surprising given that Scots have witnessed a timid SNP refuse to use the powers held over tax that Holyrood has had since the 2016 Scotland Act.”
He added: “What’s more important than ever is that we use the powers available for a Covid recovery. We have to encourage growth and increase revenues in order to strengthen public services so we don’t have to choose again between fighting a virus and maintaining critical services.
“Removing the constitutional element of the Finance Committee makes sense, as do all the other suggestions that seek to improve transparency and scrutiny. They are worthy of further consideration in order for the Scottish Parliament to better hold the government to account and win back the trust of the people.”
Scottish Liberal Democrat economy spokesperson Katy Gordon said more needed to be done to “boost public awareness of the powers of the Scottish Government”.
She added: "As well as work on public engagement, the Scottish Liberal Democrats are proposing Integrating civil and citizenship education into the current curriculum, including financial education so that young people grow up with a greater awareness of financial matters."