Belfast Telegraph

Thursday 24 July 2014

Devolving tax wins backing

But report also warns over putting £9bn block grant at risk

Pact deal: David Cameron
Pact deal: David Cameron

Giving the Executive more fiscal power to set the likes of income tax could help boost the Northern Ireland economy, according to an independent report released today.

The analysis, carried out by PwC for the Northern Ireland Council for Voluntary Action, said arming Stormont with more responsibility would improve the accountability, and possibly quality, of policy making and provide additional levers which can be used to target the economy.

But it warned that such a move is not without risk to the £9bn block grant which Westminster provides to Northern Ireland annually nor that it would be the sole means of growing the economic landscape.

"Enhanced fiscal powers should be viewed not as a game-changer, or as a solution in its own right, but as a potentially useful supplement to broader economic strategy", the report said.

It's thought the four taxes involved – income tax, stamp duty, landfill tax and air passenger duty – represent around 22% of Northern Ireland's tax revenue but the total bill is hard to assess.

The report said if the taxes were to be devolved a more accurate level of revenue assessment would be needed than the one currently available.

And it also pointed to the likelihood of a high cost administering any such system were tax to be devolved.

The release of the report follows the Economic and Integration Pact for Northern Ireland, agreed between the office of the First and Deputy First Minister and the Prime Minister David Cameron ahead of the recent G8 summit.

That pact commits the Government and the Northern Ireland Executive to "examine the potential for devolving additional fiscal powers."

Nicva Chief Executive Seamus McAleavey said it is time for fresh thinking in to how Northern Ireland's economy can narrow the productivity gap between it and the rest of the UK

"While commissions have been set up in Scotland and Wales to examine the scope for additional fiscal powers, this is the first comprehensive review of Northern Ireland's powers," Mr McAleavey said.

"We believe the report provides an excellent starting point for politicians and civil society to begin this debate."

Dr Esmond Birnie, PwC Chief Economist in Northern Ireland said that debate around the issue is essential.

"Northern Ireland remains the only part of the UK not to have undertaken such a review and I hope that this report will help to start that debate.

"Fiscal variation will not be a game changer but it could improve accountability and be a useful addition to the existing levers of policy."

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