Structural change in the Scottish labour market, the tax take and the new parliament's income tax-varying powers

This article examines the implications of increased labour market flexibili ty, in the form, of part-time work, for the Scottish public finances in the context of devolution and the establishment of a Scottish Parliament with income ta varying powers. The income tax contributions of different Scottis h household types are calculated using a spreadsheet-based model. The findi ngs show that any trend towards part-time, rather than full-time, employmen t could seriously erode the country's total income tax take and reduce the effectiveness of the tax-varying powers to provide a source of additional r evenue for the Scottish Parliament.