Fiscal apocalypse: Northern Ireland spending exceeds tax by 39.3% of its GDP

There’s been a lot of complaining, mostly though not entirely from the SDLP, and certainly the unions, that OFMdFM ought to be fighting a better fight with Whitehall, and in particular HM Treasury… Well, according to Douglas McWilliams (H/T reader Stuart), here’s what Sammy Wilson is up against when it gets close and personal with Mr Osborne’s traditionalist team:

In the UK there is considerable variance in tax receipts as a share of GDP between regions – from Northern Ireland where tax is only 27.7% of GDP to London where tax is 45.2% of GDP. These differences are about half the variances in public spending as shares of GDP.

But for some taxes the regional differences are huge. The bulk of Stamp Duty Land Tax is paid in London and the South East. The 50p income tax rate is also largely a London and South East tax.

But the taxes and public spending reinforce each other. So whereas in London tax exceeds spending by 10.3% of its GDP, in Northern Ireland spending exceeds tax by 39.3% of its GDP.

To standardise this, you need to subtract the total deficit which on this definition (a few small items are excluded so it is not completely comparable with normal PSNB numbers) is 10.0%.

So London provides a net subsidy of 20.3% of GDP. Northern Ireland receives a net subsidy of 29.4%, while Wales receives a subsidy of 26.0% and the North East 22.2%.

Ssshhh…. Don’t tell the Germans!

BTW Scotland comes in at zero under McWilliams’ calculations when he takes into account oil transfers.. Onwhich more later…


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