The Scottish Government’s budget has been boosted by over £4 billion since the introduction of devolved taxes in 2015/16. But that figure is significantly less than the additional tax raised over the same period, a trend that is set to continue.

In 2025/26 alone, the Scottish Government expects to raise up to an additional £1.7bn from its Scottish Income Tax rates and bands. However, the budget is only projected to benefit by £616 million because of how the fiscal framework operates. The relative performance of the Scottish tax base, such as earnings and employment, is factored into those calculations and is a main reason for the difference. But the Scottish Government has not been transparent enough about why the difference exists and how it thinks it can be addressed.

Tax and economic growth are central to the Scottish Government’s plans to deliver fiscal sustainability. But in practice its focus has been on controlling public spending. The government has not been clear enough about whether it expects tax policy to help further close an expected £2.6 billion funding gap by 2029/30, or how its economic strategies will help grow the tax take.

Stephen Boyle, auditor general for Scotland, said: “Devolved taxes are growing Holyrood’s budget, but their impact is weakened by Scotland’s lower earnings and employment growth compared with the rest of the UK.

“The Scottish Government needs to be more transparent with the public and Parliament about the net impact of its tax choices on the Scottish budget.

“It also needs to better align its tax and economic strategies and set out which of its economic interventions are specifically expected to help grow the Scottish tax base.”