The tax and accountancy bodies make the call in a new paper, Building a Better Tax System, setting out their priorities for the devolved tax system in the next Scottish Parliament.

The poll of 1,098 adults in Scotland was undertaken by the Diffley Partnership in March 2021. It is the third to be commissioned by CIOT since the introduction of Scotland’s new income tax regime in 2018.

The 2021 poll found that 33% of those surveyed said they were unaware that the Scottish Parliament had made changes to the tax system since 2015 (such as to income tax and council tax).

At the same time, it found that 26% said they were ‘not aware of’ the Scottish Parliament’s powers to make changes to income tax rates in Scotland, while 25% said the same for Holyrood’s powers over Council Tax, Business Rates and Land and Buildings Transaction Tax.

Just over one in four (27%) correctly identified that income tax powers are shared between the Scottish and UK parliaments, a fall of 4 points since the survey was first conducted in 2018.

A total of 83% of Scots surveyed think they need better information about how taxes are decided in Scotland. This compares to 86% in 2019 and 84% in 2018.

A further 39% knew a little or a lot about the Scottish Taxpayer status (the rules that define who is eligible to pay Scottish Income Tax). This is an increase on the 34% who answered in this way in 2019, but is 9% lower than the 2018 survey.

The steps that CIOT and ICAS would like to see introduced in the next Scottish Parliament include:

• Strengthening parliamentary scrutiny of tax by introducing a Scottish equivalent of the Westminster Finance Bill to make changes to the tax system easier and more visible and removing the constitution remit from the Finance Committee to enable it to spend more time scrutinising tax policy.
• Better budget coordination between the Scottish and UK governments to overcome recent budget delays that the organisations say have ‘cut across the devolution settlement’.
• Limiting the use of Holyrood’s tax powers as a source of ‘last minute budget concessions’ and moving towards the development of a longer-term approach to tax policy development that considers existing tax powers alongside any future proposals for new taxes
• Improving public awareness and understanding of the Scottish tax regime through improved visibility of tax in the Scottish political calendar and promoting tax education within the Scottish curriculum.

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.”

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.”

On the need for a more strategic approach to making Scottish tax policy, Alexander 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.”