Spending warning for independent Scotland

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

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'Taxes could rise in an independent Scotland'

An independent Scotland would face tougher economic choices than the UK as a whole, according to an economic think tank.

The Institute for Fiscal Studies (IFS) said, to ensure financial sustainability for the next 50 years, Scotland would have to cut public spending and, or, increase taxes.

The most optimistic scenario would see tax rise from the current rates of 29% for income tax and 28% for VAT, or the independent nation would need to cut public spending by 6%.

In previous years, money raised from North Sea oil has "more than made up" for Scotland's high public spending, but failing revenues mean Scotland could not rely on it in the future.

"Over the long term, revenues from the North Sea will probably decline and official population projections suggest that the average age of the Scottish population will increase more rapidly than for the UK as a whole, putting greater upward pressure on many areas of public spending. As a result, to ensure long-run fiscal sustainability, an independent Scotland would need to cut public spending and/or increase other tax revenues more than would be required across the UK as a whole."

– Gemma Tetlow, programme director, IFS

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