Scottish Referendum:  Fiscal Powers

Oral Answers to Questions – in the Northern Ireland Assembly at 2:00 pm on 22 September 2014.

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Photo of Gerry Kelly Gerry Kelly Sinn Féin 2:00, 22 September 2014

1. asked the First Minister and deputy First Minister whether they agree that, given the result of the Scottish referendum, we should be arguing for the fullest possible transfer of fiscal powers to the Assembly. (AQT 1461/11-15)

Photo of Peter Robinson Peter Robinson DUP

I am sure that the Member will join me in welcoming the outcome of the Scottish referendum and the strong desire to retain the Union with the rest of the United Kingdom.  In welcoming that, I recognise that he wants to strengthen the Union by improving the structures in the United Kingdom.  In that context, as I indicated earlier in Question Time, we already have a commitment from the United Kingdom Government in the economic pacts that were signed by the deputy First Minister and me with the Prime Minister, David Cameron, that we would consider all the fiscal levers to see what further powers should be devolved.

I do not accept the premise that simply transferring the economic levers into the hands of the Assembly will necessarily transform the social and economic policy of Northern Ireland.  There is a limit to the impact that many of those taxes and other arrangements would have to enable the Executive to make real and meaningful change.  There is no panacea to be found in that, but there would be a significant cost if we were to take over responsibility for some of those elements and had to operate them ourselves rather than having the economy of scale of the whole of the United Kingdom operating them.

Photo of Gerry Kelly Gerry Kelly Sinn Féin

Gabhaim buíochas leis an Chéad-Aire as a fhreagra.  I thank the First Minister for his answer up to now.  Let me not join him in welcoming the result of the referendum.  However, there has been a referendum, and the issue at stake here — and I ask the First Minister again — is that there is certainly an impression that the DUP is not up for more power being brought to the Assembly.  Does he not agree that, while Scotland is arguing for more powers, especially in the fiscal area with taxes and other matters, we should get as much power here as possible so that we can have an impact on the economy and the lives of people in the North as opposed to leaving it to the whim of people in London?

Photo of Peter Robinson Peter Robinson DUP

The first things that we need to ask ourselves when we look at taking any additional power is whether we can operate it and do we have the cohesion in the Assembly and Executive to be able to take decisions on taxation matters.  Secondly, if we had that power, would there be a financial incentive or advantage to us or would it simply be to tax more, which is the answer that some people will give?  Thirdly, if we are going to have that power, would there be a cost to us in operating it?  I suppose that there is a fourth question, which is this:  what social or economic change can we bring about by exercising that power?

Look at some of the taxes that are available.  I think that there would be little difficulty in us operating such a scheme as stamp duty land tax.  It is doable.  I do not think that it would transform the economy in Northern Ireland, and there would be a small cost attached to it.  However, it certainly is doable.  If VAT was to be considered, there would be some major EU difficulties with Northern Ireland being given those powers.  Even if it was being devolved around the United Kingdom, there would be very considerable costs, although, on the upside, it would, for instance, allow you to look at hotels, restaurants and other tourist-led functions and reduce VAT to increase that element of the economy.  So there are levers that you could use if you had VAT control.  However, I do not think that we would get it, because of Europe, and there would be a cost to us exercising that power.  Landfill tax is, again, doable, but is not going to bring the transformative change that the Member is looking for.  Corporation tax is, in my view, doable and valuable, and we should continue to seek it.  Income tax, which is being offered to the Scots and is up for referendum in Wales, would be a very considerable difficulty and would have a significant cost, as indeed would some of the other elements, such as National Insurance contributions.  So it is no panacea.  There are problems that need to be thoroughly investigated, and I am glad that the Department of Finance and Personnel is already preparing papers on each of those elements.