Unlocking fiscal autonomy: The evolution of devolved taxation

The Celtic Academies Alliance facilitated a discussion on the origins of devolved taxes and the extent to which new fiscal powers have been deployed by each administration. This report summarises the discussion that assessed the effectiveness of devolved taxes in Scotland, Wales, and Northern Ireland, reflects on the unique challenges facing each administration, and considers potential solutions through a variety of measures, including new taxes and further devolution.

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Professor Iain McLean, an expert in taxation and public expenditure, runs through some of the policy paper’s themes, reflections, and ideas.


In the Scottish context, the report acknowledges warnings from the Scottish Fiscal Commission that Scotland’s public finances are unsustainable. The report suggests the Scottish Government faces a pincer movement, where putting up tax rates is not generating much more revenue due to poor economic performance. Wales and Northern Ireland face unique geographical challenges, with highly permeable borders playing an outsized role vis a vis Scotland. It was noted that income and excise taxes in Wales were unlikely to generate the same result as in other devolved nations due to the high proportion of the population living close to the border. This issue limits the discretion of any Northern Ireland Government too, as excises need to align (at least partly) with the Republic of Ireland. Additionally, Northern Ireland faces competitiveness issues with the Republic, which has a corporation tax set lower at 12.5%.

The report considers a number of policy solutions for each administration, emphasising tools useful for all three devolved governments. This discussion covers the further devolution of fiscal levers, such as corporation tax and VAT, as well as proposing new taxes, such as the green land value tax (GLVT), which is considered at length in the report.

The Celtic Academies Alliance report identifies the issue at the heart of devolved taxation in the UK as all three devolved governments spending considerably more than they raise in taxation. The report concludes by arguing that a more mature tax-and-spending regime in each case requires the devolved administration to take responsibility for each marginal £ it spends and each marginal £ it raises in tax, so that it can make the trade-offs that a mature democracy requires between taxing and spending. Moreover, the devolved administrations should all consider more innovative approaches to property taxations so that property taxes are less regressive, do not discourage transactions, and fall most on the shoulders of those who can most afford to pay them.

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Celtic Academies Alliance

The Celtic Academies Alliance is an alliance between the Learned Society of Wales (LSW), the Royal Irish Academy (RIA), and the Royal Society of Edinburgh (RSE). Its purpose is to inform public policy developments at both the UK level and within the devolved nations.

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The position within this summary reflects the discussion and views of the roundtable attendees and not necessarily the views of the Learned Society of Wales, Royal Irish Academy, and the Royal Society of Edinburgh.