STORMONT AND the devolved administrations in Scotland and Wales should be given powers to alter their own tax levels, an independent and influential British think-tank has argued.
The Institute for Public Policy Research (IPPR), based in London, says the Northern Ireland Executive should be considered for such a move as soon as the current powersharing administration is successfully bedded down.
However, the recommendation puts the think-tank on a collision course with both the British government, which opposes the devolution of powers to amend personal taxation policy, and unionists, who have voted against it.
Lobbying for powers to cut the North’s rate of corporation tax to the Republic’s rates to improve competitiveness has already been faced down by the British treasury in London. The IPPR has recommended: “Under a revised model the devolved administrations might be given wider powers to vary the rate of personal income tax.” It further argued that control over stamp duty, environmental, alcohol and tobacco tariffs should also be considered.
The suggestions are included in a paper, Fair Shares: Barnett and the Politics of Public Expenditure,which addresses taxation policy throughout the UK as well as the controversial Barnett formula – a yardstick by which the treasury allocates public finances to the regions.
Calling for urgent reform of the Barnett formula, named after former chief secretary to the treasury Joel Barnett, the IPPR said failure to change the method could imperil the basis of the UK itself.
An IPPR spokeswoman said the report also argues that the Barnett formula is no longer appropriate for devolution.”