Daily question: How much does Scotland pay in tax and how much does it spend?

As the people of Scotland weigh up how to vote in the independence referendum, they are asking questions on a range of topics.

In this series, we are looking at those major questions and by using statistics, analysis and expert views shining a light on some of the possible answers.

Here we look at taxes and find out how much Scotland pays and how much it spends.

Do you have a referendum question? Let us know by....

BBC news website users, including Alan McNulty, Bob Farquharson, Sya Simpson, Scott Morrison, Ian Metcalfe, Robert Donald, Angus Armstrong and Nigel Laws, have asked a variety of questions about tax.

How much does Scotland pay in taxes and how much does it spend?
tax sign

This is a question which has dominated Scottish political debate for decades, fuelling resentment on both sides of the border.

And the truth is complicated by two factors, oil and debt.

Scotland's tax conundrum

In 2012-13


Tax revenue generated by Scotland

  • 9.1% of UK tax revenue came from Scotland

  • 8.3% of the UK population live in Scotland

  • £10,000 tax per head in Scotland

  • £9,200 tax per head, rest of UK

Or to put it another way, for every person in Scotland last year, the exchequer received £800 more than the UK average.

And that gap is not new. The Scottish government has produced experimental statistics suggesting that Scottish tax receipts have been higher than the UK average in every one of the past 33 years.

Of course all of these statistics rely on certain assumptions and one in particular makes a big difference.

The figures for 2012/13 assume that 84.2% of taxes from UK oil and gas accrued to Scotland, a geographic share calculated by experts from the University of Aberdeen based on the existing North Sea fisheries boundary.

Allocate the oil on a population basis (8.3% rather than 84.2%) and Scotland's tax receipts for 2012/13 were £48.1bn (rather than £53.1bn), equivalent to 8.2% of the UK total tax take.

Strip out the oil altogether and they were £47.6bn, also around 8.2% of the UK total.

Scotland, remember, has 8.3% of the UK population.

And what about spending?
smashing a piggybank

But of course taxation is only part of the story. When it comes to spending, Scotland is above average.

In 2012/13 total public spending in Scotland was estimated to be £65.2bn, or 9.3% of total UK spending, with a population of 8.3%.

This figure takes into account a share of spending by UK government departments, including benefits payments, as well as a population-based slice of interest payments on the UK national debt.

So, even by the most generous measure, Scotland raised £53.1bn in 2012/13 and spent £65.2bn, leaving the country £12.1bn short.

In the same period, the UK had a shortfall of £117.4bn.

Public expenditure graph

According to the Treasury, public spending in Scotland is higher than anywhere else in the UK apart from Northern Ireland. Explanations have included Scotland's relative sparseness and its poor health.

But if Scotland is spending beyond its means - and clearly it is - then so too is the UK.

Both are running a deficit, the difference between the money a country raises in taxes and the amount it spends and invests.

The latest comprehensive snapshot concluded that Scotland was running a larger deficit as a percentage of economic output than the UK average.

Deficits compared

Net fiscal balance

  • Scotland (including geog. share of oil revenue, 2012-13) £12.1bn

  • UK (including 100% of oil revenue, 2012-13) £114.8bn

  • Scotland (2011-12) £8.6bn

  • UK (2011-12) £117.4bn

We can see that Scotland's deficit increased sharply between 2011/12 and 2012/13, up by £3.5bn. Excluding oil revenue, Scotland's deficit would have been considerably higher in 2012/13 at £17.6bn, or 14% of GDP.

But this has been unusual. In recent years, Scotland has actually been running a smaller deficit as a percentage of GDP than the UK average.

Chart showing deficit
Why is this?
oil platforms

Again, it comes down to oil. The year 2012/13 was a particularly unflattering one for the Scottish economy because of what might be called an "oil shock", a dramatic fall in tax revenue from the UK continental shelf.

This was blamed on the North Sea industry's worst leak for 20 years which cut production in Total's Elgin-Franklin field, along with particularly high levels of investment eating into profits and therefore taxes.

Such a spectacular change underlines the difficulty in predicting with any certainty future revenues from oil and gas.

Campaigners for independence say Scotland's underlying economy is strong and oil is a bonus. Supporters of the union say an independent Scotland would be dangerously reliant on one volatile resource.

Either way, reducing borrowing without hiking taxes or cutting services will remain a big challenge, whether Scotland votes "Yes" or "No" in the referendum.

More on This Story

More Scotland stories


Scotland Live

    09:08: BBC Scotland Weather Latest

    There will be a few mist or fog patches initially, although hill fog will be extensive over eastern Scotland.

    Outbreaks of light, patchy rain will continue to affect parts of the east with the odd spot trying to feed through the Central Lowlands at times.

    There will be more in the way of brightness towards the Glasgow area, with sunshine for the west coast and the north-west corner. Mild with highs of 10 or 11C.

    A fresh south-easterly wind will affect the east coast, strong to gale force over the Northern Isles.

    09:01: Scotland's top book character is...

    The public has voted Francis Crawford of Lymond the most popular character from a Scottish book.

    Francis Crawford of Lymond

    The central character of Dorothy Dunnet's Lymond Chronicles was joined in the list by Ian Rankin's Rebus, Sherlock Holmes and Oor Wullie.

    Francis Begbie from Irvine Welsh's Trainspotting came second by one vote.

    The poll attracted more than 3,150 votes from 28 countries including Argentina, Singapore and Qatar.

    Edinburgh-based JK Rowling earned two places in the list for Hermione Granger (sixth) and Harry Potter (joint ninth).

    08:53: Incinerator plans

    There are plans to build a multi-million pound plant in East Lothian, which will burn rubbish to create energy.

    The company Viridor says the new system at its site near Dunbar will incinerate around 300,000 tonnes of waste a year, preventing it from being dumped in land-fill sites. But environmental groups claim the emissions are toxic.

    Rubbish in a refuse lorry

    Martin Gray, from Viridor, told BBC Radio Scotland's Good Morning Scotland programme that the concerns are unfounded.

    He said: "In terms of the energy recovery facilities themselves, it is literally the material that can't be recycled that goes in the front end.

    "People can be reassured in terms of this established proven and safe technology operating across Europe. And it rigidly complies with stringent national and international standards."

    08:44: Today's Morning Call BBC Radio Scotland

    Yesterday's Smith commission report recommended the Scottish parliament be given new powers over some taxes and welfare payments.

    But do the proposals go far enough? Kaye Adams is joined by Stephen Gethins, former special adviser to Alex Salmond and political commentator, and former Labour advisor Simon Pia.

    And it's Black Friday - so we want to know if you queued all night and did you get yourself a bargain?

    Get in touch and let us know: Text 80295 with your views.

    08:37: Aberdeen bypass 'ahead of schedule'

    The Aberdeen bypass will be completed ahead of schedule, the Scottish government has announced.

    It was originally estimated that the £745m project would be finished by the spring of 2018.

    But Infrastructure Minister Keith Brown will today confirm, on a visit to the North-East, that the completion date has been brought forward to the winter of 2017.

    The new deadline also applies to work to dual a section of the A90 between Balmedie and Tipperty.

    Mr Brown said the committed investment of nearly £1bn by the Scottish government in transport infrastructure in the North-East underlines its determination to deliver for the area.

    08:31: Celtic lose...but qualify

    Celtic qualified for the knockout stage of the Europa League despite falling to defeat at home to Salzburg.

    Stefan Johansen pulled one back for Celtic against Salzburg.

    Salzburg's win secured the Austrians' top spot in Group D, with Alan scoring twice in the first-half and Naby Keita adding another late on.

    Celtic's riposte came from Stefan Johansen and they played more assuredly after the break, but they were undone by Salzburg's initial zeal.

    Astra defeated Dynamo Zagreb in Romania to ensure Celtic finished second.

    08:24: On the roads BBC Scotland Travel Latest

    A92 Fife - Road traffic collision where B946 comes onto A92, (near Williamson bus depot, not far from the Five Roads Roundabout). Affecting the road both ways.

    M90 Friarton Bridge Southbound - Road traffic collision involving a lorry and car - blocking lane 1 of 2 - at the north end of the bridge. Traffic busy on approach.

    A9 Southbound - Reports that one lane is blocked by an accident southbound between A822 (Greenloaning) and B8033 (Ashfield).

    Crianlarich- Traffic light failure on A82 Westbound between A85 and Inverarnan means slow traffic. Problem with the temporary traffic lights on a bad bend. Police are en route.

    08:16: Black Friday frenzy

    Police were called to a Tesco supermarket in Glasgow at about midnight after reports of scuffles among bargain-hunters at the start of so-called Black Friday.

    tesco at silverburn glasgow

    The 24 hour-store at the Silverburn shopping centre in Pollok was closed for a short time.

    Police were also called to a Tesco store on the Kingsway in Dundee after hundreds of shoppers packed the car park and queued for cut price goods.

    There were no arrests in either incident .

    08:10: Craig Whyte to appear in court

    Former Rangers owner Craig Whyte will appear in court in Glasgow later after being detained as he arrived in the UK from Mexico.

    Craig Whyte

    The 43-year-old was held at Heathrow Airport on Thursday before being brought to Scotland.

    He was held on an arrest warrant in relation to an investigation into his takeover of Rangers in 2011.

    Extradition proceedings were not required.

    08:02: Clutha benefit gig

    A benefit gig will be held later in memory of the victims of the Clutha tragedy.

    Clutha crash scene

    A police helicopter crashed through the roof of the pub on Friday 29 November last year, killing ten people and injuring dozens more.

    Tonight a charity show will be held at the Barrowlands to mark the first anniversary of the tragedy.

    Meanwhile, the families of the victims are still waiting for the conclusion of a report by the Air Accidents Investigations Branch into why the crash happened.

    08:00: Paul McLaren BBC Scotland News

    Good morning and welcome to another instalment of Scotland Live as we offer you a comprehensive round-up of news, sport, travel and weather from across the country between now and 18:00.



BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.