already have reduced revenue from those affected, according to the Institute for Fiscal Studies. It’s analysis of the Scottish budget over recent years comes with a warning for for this year’s budget against further divergence from income tax rates in the rest of the UK.
By Professor John Robertson OBA
There’s something missing. This:
The increases in Scotland’s top rate of income tax may have reduced revenues – although significant uncertainty remains. Scotland’s income tax rises have likely increased tax avoidance and migration – but the size of the effects is uncertain.
You don’t have to be an economist to see how little newsworthy there should be there. BBC Scotland decide to omit the uncertainties and present it dishonestly, once more, as bad news for the SNP Government.
The word ‘warning’ appears only once in the IFS report:
This raises the possibility that estimates for both years are picking up some other factor as opposed to the tax changes in Scotland, in addition to the usual health warnings about wide statistical margins of error.
‘Divergence’ appears 3 times but is not used in any sentence warning against it.
So, the BBC report is essentially a lie designed to put people off voting for the SNP in 2026. The IFS report too is ignorant of the facts on internal migration to avoid taxation differences. Here it is again:
From the Center on Budget and Policy Priorities, Tax-Related Migration Is Grossly Exaggerated: a Research Preview, 2023
Most people in the U.S. plant roots in the places they live, and it takes a lot to uproot and move across state lines. Only about 1.5 percent of people make interstate moves in any given year. For those who do move, what attracts them to one state over another? For some it’s a job opportunity. For others it’s family, housing, or even better weather. One factor that comes up rarely, if ever, is taxes.
That doesn’t stop anti-tax advocates from claiming that proposals to raise state revenues will drive people, especially high-income people, away. They paint a picture of doctors, engineers, and other highly skilled and sought-after workers leaving the state en masse. They also cite the corollary, that lowering taxes will attract meaningful numbers of people to the state. These tax flight claims are dire — and wrong — and too many policymakers find them persuasive.1
I know, US research but from a similar culture, political and economic system. It is very easy to move from one US state to another but folk just don’t.
In Scotland, recently?
From STV in April of this year:
Thousands more workers moved to Scotland than left since the nation became the highest taxed part of the UK, research by HMRC has found.
The study found there was “no evidence of changes in labour market participation” following tax rises in 2017 that saw Scotland begin to diverge from the rest of the union.
HMRC found that in the 2021-22 tax year, Scotland benefited from a £200m surplus in taxable income from Brits from the rest of the UK.2, 3
Sources:
https://www.gov.uk/government/publications/labour-market-participation-and-intra-uk-migration-of-taxpayersMention wellbeing
https://www.cbpp.org/blog/tax-related-migration-is-grossly-exaggerated-a-research-preview
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Talking-up Scotland 'Albatraz' 
I noted this morning that The Herald are also headlining this bit of non-news.“IFS: Scotland’s higher taxes may have generated less revenue” At least they have the decency to say “may”. But non-news is non news and the IFS are notorious at getting there figures wrong.
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Candidly, this is an unworthy report from the IFS, an organisation that should stand or fall based on the rigour of its quantitative analysis and its evidence based policy pronouncements.
The piece is replete with references to statistical uncertainty, sparse data and absence of up to date statistical evidence.
It also makes reference to an HMRC study which found ‘an increase in net migration to Scotland during the period since tax policy started to diverge, including among the higher-income taxpayers whose taxes have increased in Scotland.’ And also reports: ‘these data do suggest that any migration response to Scotland’s higher taxes was not big enough to offset fully other factors driving inflow of taxpayers – at least up to around 2½ years ago.’ (my emphasis) For the avoidance of doubt, this HMRC report seems to be the best, the most recent source of quantitative evidence.
And yet despite all of the above and more in a similar vein, the IFS still feels. justified in having this on its website:
‘The increases in Scotland’s top rate of income tax may have reduced revenues – although significant uncertainty remains
‘Comment: Scotland’s income tax rises have likely increased tax avoidance and migration – but the size of the effects is uncertain.’
15 November’
And for information on ‘increased tax avoidance’ there is NO empirical data anywhere on this in the IFS article: there are references only to theory and modelling.
It’s as if the IFS has chosen to write in a style which would generate mainstream media headlines. Surely not!
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When I share your posts on facebook, a large number of them are being removed. I just wonder if you have any comments on this?
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I’ve given up on FB. Still on X and now on BlueSky. Best just follow me here
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