Devolution without tax raising powers is a fraud

in the Greater Manchester discussion, I've argued that devolution is not real unless the tax raising powers follow.  

This comes from the experience in Scotland where the Scottish Parliament was set up with a fairly broad range of functions but very little control of the budget.  The tax raising power given was to vary the standard rate of income tax by 3p.

the power has never been used as the money raised would be so small in comparison to the impacts.  

But that means it's easy for a Scottish Government to claim all that is good as a result of its management and all that is bad as a result of the limited resources from the centre.  That isn't healthy.

we have also had a council tax freeze in Scotland for the last 7 years: that also corrodes democracy, even more than the council tax 'gearing' that meant a proposed 1% rise in spending would result in a 4 to 5% rise in council tax.

these evils - the inability to raise taxes to meet reasonable rises in spending due to gearng effects and the stuktifiing impacts of centrally imposed block grants and freezes are avoided if devolved bodies are able to substantially raise their own funds.

of course there need to be equalisation mechanisms where tax bases are low or where the costs of delivering services (e.g. Remorse rural) are high.  But substantially, and as a matter of principle, devolved institutions at whatever level need to be substantially able to raise their own revenues.  

Debra Storr Apr 10, 2015

Thanks everyone who commented on this.  I don't see the need to change what I wrote originally.

I was careful to set out some general principles and in refining this idea, I think we need to have some ideas of how this might work in practise. 

Under the Smith Commission there was a proposal to turn 10p of income tax into a Scottish tax (reduce UK income tax in Scotland by 10p) and let the ScotGov add this back in to make up the revenue.  some commentators said this would throw up issues.

See

http://bellacaledonia.org.uk/2014/12/04/smith...to-feasibility/

http://bellacaledonia.org.uk/2015/01/25/pivot...osals-on-smith/

This mixture of taxes with dual control on some taxes and total control of others is what is currently proposed and is certainly a model.

Debra Storr Apr 10, 2015

In Scotland, the SNP has started to talk about Full Fiscal Autonomy : the idea that Scotland controls all taxes raised in Scotland and remits a sum to the UK to cover reserved functions.  When that is perhaps a very limited range of functions (defence, foreigh affairs, maybe servicing historic debt) that's might be fine (but it's being hotly contested in the GE).

The risk of this are ultimately very similar to the risks of independence but of course it depends on the UK responsibilities and how these vary in economic stress times.

Rob G Apr 10, 2015

Debra,

Do you have any ideas of how to phrase a clause that could go into the constitution? I'm not entirely sure what it is you are advocating for, as opposed to warning of the dangers of going down certain routes...

Debra Storr Apr 10, 2015

Possibly something fairly simple:

Each tier of government shall be accorded the power to raise its own funding. 

Higher tiers shall have a responsibility to distribute funds to compensate areas for excess costs in the delivery of services or to variations in the tax base.  

Michael Ward Apr 11, 2015

Hi do you think that this idea could be merged with those produced by Alastair and Antonia? 

https://constitutionuk.com/category/2851#/post/90350

https://constitutionuk.com/post/82935

 

Debra Storr Apr 12, 2015

I've no problem with 82935 : we are sharing the idea that tiers of government should be largely in control of the resources necessary to manage their functions.  

2851 I struggle with as it seems to have a division of statutory and non statutory functions that I don't get: to me a tier of government is responsible for an area e.g. Education and should get on with it.  

it also seems to imply some form of Barnett formula where funds are distributed from the centre : and that I am totally against. 

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