A top economist has said a Northern Ireland Fiscal Commission could inject a dose of reality into Stormont's spending decisions.
Ulster University senior economist Dr Esmond Birnie was speaking after Finance Minister Conor Murphy revealed he has set up the commission to examine how the Executive could best use its powers to tax the public and local businesses.
The DUP said it would send "shockwaves" through Northern Ireland if it was at the point where Sinn Fein was examining new taxes.
Currently, Northern Ireland has the power to cut corporation tax - however that power has never been exercised as it would lead to a cut in the block grant from the Treasury.
Speaking on BBC NI's Sunday Politics show, Sinn Fein minister Mr Murphy said Stormont needs "more fiscal levers". "I have asked a commission to come together to do a broad report to look at the tax-varying issues that should be available to us," he said.
Mr Murphy said the new commission will report to the next Stormont Executive following next May's Assembly's elections.
"I wanted to look at the full gamut of tax-varying powers that may be available to us,"
The minister said that the Executive has to look at ways to find the means to fund services properly. Leading economist Dr Birnie gave a cautious welcome to the establishment of the new body. "In principle, a Fiscal Commission is very welcome - both Wales and Scotland have had several over the last decade," he said.
But the economist warned that using tax raising powers would mark a significant change in the relationship between the Executive and the electorate.
"In theory, policy-making in NI might become more realistic and appropriate if the Executive had to confront the constraint that decisions to spend more sometimes mean corresponding decisions about how to find the revenue through taxes," he said.
"It will be important to realise that decisions will have to be made about a range of taxes - sometimes to raise to increase revenues or perhaps achieve another objective (like discouraging environmentally- damaging activity) and sometimes to lower tax rates to increase the competitiveness of some part of the economy.
"And the Commission may consider the wider question of charges for public services and the extent to which the totality of such charges in NI is less than GB - domestic water charges come back into view".
But the minister's plan immediately came under fire from DUP MLA Paul Frew, who chairs Stormont's Finance Committee.
He said Mr Murphy's plans "will send shockwaves through the business community and every householder in this country, if we're getting to the point where a Sinn Fein finance minister is looking at income-raising powers," he said. "I think we have to look first of all at how do we function as a government," he said.
"I would ask the finance minister to review and reform what we do to make it more efficient and effective, but we should also look at the tax-raising powers that we already have."
He added: "It's one thing saying that we want tax-varying powers but tax-varying powers mean that you can put things down or up … and we need ministers that are going to make tough decisions, and I don't think I have seen a tough decision being made by this finance minister yet."