Date lodged: 8 December 2017
To ask the Scottish Government what its position is on whether off model adjustments are regarded as behavioural responses for the purposes of forecasting potential reactions to income tax changes.
Answered by: Derek Mackay 21 December 2017
The Independent Scottish Fiscal Commission (SFC) are responsible for producing tax forecasts in Scotland. Last year, before taking on this statutory responsibility, the SFC concluded that the Scottish Government’s income tax forecasts were reasonable. As the SFCs recent report points out: off model adjustments are used by forecasters because a single statistical model is unlikely to cover all the different elements impacting on income tax receipts. Therefore, a number of “off model” adjustments are applied to the income tax forecasts to account for issues, such as Gift Aid payments, Tax Motivated Incorporations and other behavioural responses to policy changes.