The Institute of Chartered Accountants of Scotland (ICAS) has submitted its response to the Scottish Parliament’s call for evidence on the affordability and sustainability of tax and spending plans.
The call for evidence forms part of the Parliament’s pre-budget scrutiny of Scotland’s 2027–28 fiscal plans.
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In its response, ICAS called for a long-term, whole-of-government strategy that would align economic growth, tax policy, fiscal sustainability and public service reform.
The institute said this approach is essential to closing the projected £4.7bn gap between Scotland’s spending plans and available funding by 2029/30.
ICAS said it supports the combined approach used in the Scottish Spending Review and Medium-Term Financial Strategy. However, it said the current framework lacks sufficient detail.
The institute also noted several unanswered questions. These include how economic growth will be achieved and how sustainable tax revenues will be delivered. It also raised how these two factors will together help close the fiscal gap.
ICAS added that public sector reform plans need more clarity. Specifically, how reform will improve service delivery, efficiency and outcomes.
It also highlighted a mismatch between budget planning and public service delivery timelines. Without better alignment, spending decisions may be driven by immediate financial pressures.
It added that since gaining additional tax powers through devolution, Scotland’s budget has become more exposed to volatility.
This is because Scotland’s budget now depends more on how its tax base performs relative to the rest of the UK.
ICAS said that Scotland’s tax strategy must be resilient enough to withstand unexpected global and domestic events. It should also adapt to technological changes that could disrupt tax revenues.
It noted that achieving financial sustainability requires coordinated effort. This effort should be guided by a long-term strategy capable of addressing the scale of the challenge.
