Silk Commission, Sammy Wilson and the DUP’s impromptu dismissal of tax varying powers…

Newton Emerson today usefully points at Wales and the recent work of the Silk Commission on the devolution of further powers to raise and lower taxes. It’s worth looking more closely at Wales. For a country that only just squeaked devolution (there was about 7k votes majority in favour in a voting electorate of just over a million), the levels of trust in the Senedd seem remarkably high:

  • 62% of the respondents would like to see increased powers for the NafW (including the 9% in favour of independence), with 24% in favour of the status quo;
  • Eight in ten people trusted the NafW to act in Wales’s best interests;
  • A majority believed that the existence of the NafW had given Wales a stronger voice in the United Kingdom;
  • The Welsh public were as likely to believe that the NafW had the most influence over Wales as they were the UK Parliament;
  • There is a relatively high awareness of whether current powers lie at UK Parliament or National Assembly level; and
  • Among those desiring further powers, a majority (around two-thirds) want this within the next 5 years or beyond rather than in the next year or so.

And, it seems, the UK government has not been slow in responding to the recommendation from Paul Silk that more powers be devolved:

  •  to the Welsh Ministers current ability to borrow money to invest in Wales;
  • Landfill Tax and Stamp Duty Land Tax to ensure the Welsh Government has an independent funding stream to pay back the money it borrows:
  • and provides for a referendum to take place so that people in Wales can decide whether some of their income tax should be devolved, in the same way as it is in Scotland.

This is a unionist initiative, not a Welsh nationalist one. And yet, as Newton points out, one of the main road blockers was not Sinn Fein, but the DUP’s late Finance Minister Sammy Wilson:

…he complained that devolving a tax replaces a fixed sum from London with locally collected revenue, which varies up and down making Stormont’s budget harder to predict. The poverty of ambition this reveals is remarkable. Stormont has enough borrowing and carry over powers, plus enough regular underspending to manage a significantly varying budget.

But it seems Wilson preferred to be a glorified club treasurer than a finance minister in any meaningful sense. Wilson often told the Assembly that tax devolution undermined the union. Perhaps he was also concerned about it undermining his own ability to spend other people’s money.

Dessie Boal’s famous description of the party at the time launched back in 1971, that it would be “right wing in the sense of being strong on the Constitution, but to the left on social policies.” In contravention to the trend in the republic where people tend to talk centre left but vote for right of centre economics.

Of course tax is a toxic issue far beyond the bounds of Northern Ireland.

Such lack of ambition also lies elsewhere in the executive, even with powers they do possess. John O’Dowd’s Robin Hood raid on school budgets may be laudable in terms of its professed aims, but without serious reform and resources additional to those currently available, they’re likely to have little impact.

All very frustrating when the party in charge of the Department of Finance and Personnel could hold the key. Newton again:

…neither can he see that stamp duty has huge potential, along with Stormont’s planning and rates powers, to radically affect the housing market and address the specific problems of speculation, land-hoarding and reckless lending that squandered northern Ireland’s one true period of growth and full employment.

A case of Augustine’s cautiously conservative desire for moral virtue? “Lord make me pure, but not yet.”

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  • MrPMartin

    tax raising by this shower? No way. It’s like putting kids in charge of the sweetshop

  • Comrade Stalin

    God forgive that we’d want the people we vote for to actually govern us, eh MrPMartin ?

  • aquifer

    A variable budget is not a problem once priorities have been set, more worthwhile schemes have been planned than we might have money for, and when competent management is in place..

    For this the DUP must know what they stand for and be fit to negotiate. Also they must know what competence looks like.

    Is that asking too much?

  • cynic2

    The reason Sammy didn’t want it and why Simon will be told by Peter not to want it is that we have to pay for it by spending less. That reduces the available swill. So better to let the Brits tax ’em and take the blame

  • Morpheus

    Northern Ireland PLC generates £12.7b but spends £23.2b – we spend £10,500m more than we generate so I think spending less is inevitable especially considering the UK debt of £1,377 billion and rising by £121b a year.

    Cutting tax for the hell of it doesn’t make any sense unless you have a concrete plan to bring in new business to the country. If you owned a business and someone cut your tax significantly that just means a bigger profit margin for you, there is no onus to pass that saving on or to recruit more people.

  • cynic2

    Morpheus

    It depends. If its a lifestyle business you will spend more personally or save it. The bank may then led it to businesses or householders.

    If you are a business you may well invest it in hope of making more money. That’s how the economy should work. It hasn’t been for last 4 years because banks have no money to lend. The rate of tax also affects investment decisions.

    Just out of interest last month I worked out just how much of every pound coming in our door goes to the taxman in personal tax vat nic and corporation tax and rates. As soon as you start to make a profit almost 80% of the money coming in, in one way or another, is grabbed by the state.

  • Barnshee

    “If you owned a business and someone cut your tax significantly that just means a bigger profit margin for you, there is no onus to pass that saving on or to recruit more people”

    Oh dear the bean counter in me comes out again

    Tax is not a charge against profit its an appropriation of (part) of those profits. Reductions in tax leave the business with more profit -margins are not affected

    The question for all those enthusiats for fiiscal autonomy are

    ! Which taxes would you raise?
    2 Which taxes would you cut?
    3 Which public services would you cut to fund tax cuts ?

    You have nailed the problem here

    “Northern Ireland PLC generates £12.7b but spends £23.2b – we spend £10,500m more than we generate”

    Hopefully -as HMG continues to cut back on the subvention -reality will seep into NI politics and expenditure more closely match income and the various “industries” in the public sector will be culled.

  • Morpheus

    The same applies to the ordinary working man cynic. We earn a wage and we are taxed. We buy a car to get to work and we are taxed. We put petrol in that car and we are taxed. We drive it on the road and we are taxed. We insure it and we pay tax. We buy clothes to go to work and we are taxed. We heat our houses and we are taxed. We get electric and we are taxed.

    We pay all this tax yet one-in-four earn a salary that fails to support a basic standard of living, our social deprivation is disgraceful, how we treat our elderly is disgraceful, youth unemployment is disgraceful, our healthcare is in the swanny, the rise in the demand for food banks is disgraceful, families have to choose between eating and heating and so on.

    If we sat down and had a think about what we are actually taxed on we would wonder what the point of the whole thing is.

  • cynic2

    That’s a separate issue perhaps about:

    1 the shamefully inefficient way in which our Government spends our money. For example, just why should civil servants be paid more than those in the private sector?

    2 what we spend the money on. Grandiose developments that produce no real long term benefit in jobs or economic activity – sports stadia for example? Maze shrines / peace centres? Police college? New Government offices? Roads to nowhere that will shave 20 minutes off a 3 hour trip?

    All symptoms of our pork belly politics.

  • Mc Slaggart

    “why should civil servants be paid more than those in the private sector”

    ???? The private sector generally pays more for qualified people.

    Did you know the people of Athens complained bitterly bitterly about the cost of the Acropolis?

  • BarneyT

    It’s hard avoiding the inevitable when looking at NIs earning capacity and the heavy subsidisation at work , a policy which runs contrary to most conservatives here and there.

    We will only make this island work if we have a single economic entity without the duplicate spend and waste.

    Sadly that’s a long way off as there is far too much prejudice and fear of towards Ireland and the Irish, and more importantly no one wants to reward the “fight” for reunification. I’d like to think we could move the awful history to the side.

    The subsidisation can’t go on and without pushing unification we need to levy from all island prospects…
    in the long term and I stress the long term solution .