To ask the Scottish Executive why its Comparative Study of Business Tax Revenue shows that business property taxation in Scotland is 17% higher than in the rest of the United Kingdom.
Table 4.2 of the
Comparative Study of Business Tax Revenue shows that totaltax revenue raised from business in Scotland relative to Gross Domestic Product (GDP) is lower or comparable to most of our competitors with the exception of the United States, Ireland and Austria. This is reproduced in the following table:
Table 4.2 – Business and Transport Tax Revenue Relative to GDP, 2000
Country | Revenues as a percentage of GDP |
Corporate Income Taxation | Employers’ Social Security | Business Property Taxation | Business Transport Taxes | Total |
Austria | 2.1 | 7.2 | 0.2 | 0.2 | 9.8 |
Belgium | 3.7 | 8.5 | 0.1 | 0.9 | 13.2 |
Finland | 5.5 | 8.8 | 0.3 | 0.5 | 15.1 |
France | 3.2 | 11.3 | 0.6 | 1.0 | 16.1 |
Germany | 1.8 | 7.3 | 0.3 | 1.0 | 10.4 |
Ireland | 3.8 | 2.7 | 0.6 | 0.9 | 8.0 |
Netherlands | 4.2 | 4.7 | 0.6 | 0.9 | 10.4 |
Scotland | 3.5 | 3.6 | 2.1 | 1.1 | 10.4 |
Sweden | 4.1 | 11.9 | 0.5 | 0.7 | 17.2 |
UK | 3.7 | 3.5 | 1.8 | 1.4 | 10.4 |
USA | 2.5 | 3.5 | 1.5 | 0.2 | 7.7 |
Source: OECD (2002); GERS (2003).
As can be seen, revenue from business property taxation represents 2.1 per cent of GDP in Scotland, as opposed to 1.8 per cent for the UK as a whole. However, as the report stresses, comparing individual taxes in isolation is misleading. Furthermore, comparison of total tax revenue raised from business follows the methodology and definition used by the Confederation of British Industry in their paper, UK Manufacturing: Strategy into Action, published September 2003. Such a comparison reveals that the overall tax revenue raised from business in Scotland is 10.4 per cent of GDP, the same level as in the UK. This level is comparable to Germany, and the Netherlands, and less than countries such as France, Finland, Belgium and Sweden. As is stated through-out the report, comparing individual tax revenues in isolation can be misleading and the 17 per cent figure quoted in your question, which is a percentage of two percentages,has limited meaning.