Spending warning for independent Scotland

An independent Scotland could face tough financial choices, according to the Institute for Fiscal Studies

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'Optimal tax system' could be created in Scotland

Scotland has been warned that a 'yes' vote in the independence referendum could mean tougher economic choices in the future.

The Institute for Fiscal Studied (IFS) said the falling North Sea oil revenues and an ageing population would need the country to either raise taxes, cut spending, or both.

But independence could also give Scotland a chance to create an "optimal tax system" meaning some taxes could be lower than in the rest of the UK.

The IFS say a more equal society, less congested roads and cross-border competition could drive down high-end income tax rates, road and corporation taxes.

"TheScottish income distribution is more equal than the UK's, so the scope and need to redistribute through high rates of income tax would be less. There is less congestion on Scottish roads, so optimal motoring taxation would be lower.Independence could lead to tax competition and cross-border shopping, creating pressures to reduce taxes such as corporation tax and excise duties."

– The Institute for Fiscal Studied

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