THE Scottish Government must improve the quality of its accounts before new tax powers are transferred to Holyrood, public spending watchdogs have said.

 

In a report published today, Audit Scotland says "transparent" financial reporting will be increasingly important as the Scottish Government becomes responsible for raising more of its own revenue.

The report prompted fresh calls for tax forecasts to be made by an independent body.

The UK Government relies on the independent Office for Budget Responsibility to provide predictions of its tax take.

By contrast, the Scottish Government's forecasts are made by civil servants before being reviewed by the Scottish Fiscal Commission, a small expert panel based at Glasgow University.

The Scottish Government has set a property transaction tax, the land and buildings transaction tax, which replaces stamp duty, and a levy on landfill for the financial year starting next month.

The taxes - the first national levies in Scotland for 300 years - were devolved under the most recent Scotland Act.

In addition, the Scottish Government will raise about the income tax generated in Scotland from 2016/17.

Eventually, Holyrood will become responsible for almost all of income tax and a range of other levies under proposals agreed by the parties during the Smith Commission process.

The changes will make reliable tax forecasts an essential part of Holyrood's budget.

In its report, Audit Scotland says: "The Scottish Government now needs to set out details of how it proposes to further improve and enhance its financial reporting in this changing financial environment."

Scottish Labour Finance spokesperson Jackie Baillie said: "The experts are clear - with huge new tax and economic powers coming to the Scottish Parliament, we need a transparent system so Scots can have confidence in how their money is being spent.

"That is why Scottish Labour want to establish a Scottish Office for Budget Responsibility.

"The SNP's track record on financial accountability isn't one of clarity, it's one of spin and shifting goalposts.

"Scottish Labour have set out our plans to be transparent with the nation's finances - it is time for the SNP Government in Edinburgh to do the same - what do they have to hide?"

The Scottish Fiscal Commission, announced last year, is chaired by Lady Susan Rice, the former chief executive of Lloyds TSB Scotland, and economists Andrew Hughes Hallett and Campbell Leith.

In a Holyrood vote, 50 MSPs opposed the appointment of Lady Susan and Professor Hughes Hallett because at the time they served on the Scottish Government's Council of Economic Advisers, leading to claims they were insufficiently independent of ministers.

However, in their first assessment of John Swinney's tax forecasts they warned his replacement for stamp duty was not raise as much as the Finance Secretary predicted.

The Scottish Government spokeswoman said: "We made clear in the 2014-15 Programme for Government that we would develop legislation to place the Scottish Fiscal Commission on a statutory footing and that such a Bill would allow for the functions and duties of the Commission to be reviewed and expanded in future.

"As the Deputy First Minister confirmed to the Scottish Parliament's Finance Committee in January, we will shortly publish a consultation paper which will enable the role and functions of the Commission to be considered again."