Northern Ireland should be able to set its own limited income tax policy and have complete freedom over stamp duty and business tax, a report has said.
he IndependentFiscal Commission for NI was set up to consider how having more powers over taxes could help the province.
However, its chairman admitted that with no Executive in place, it could seem like an odd time to be giving advice.
Itsfinal reportmakes 23 recommendations and overall, suggests NI should gaintax powers gradually but with significant tax devolutionpossible by 2027/28.
It recommends partial devolution of income tax which would give the Assembly some control over rates and possibly come control over income tax bands, but with HMRC still administering the levy.
And if income tax is devolved, it also recommends devolving the apprenticeship levy, which is paid by companies.It also suggests completing devolution of corporation tax but in close co-operation with the UK government over how a cut to the main rate of corporation tax would be paid for.
At the moment, the only taxes NI has control over are rates, the carrier bag levy and air passenger duty (APD) on long-haul flights.
But tax devolution means NI losingout on its block grant from Westminster and in the case of long-haul APD, it has had to pay 2m a year back to the Treasuryfor its decision to zero-rate the tax to preserve a transatlantic flight in 2013.
Payment continues despite NI no longer having a long-haul connection, with the amount estimated at 2.3m in 2020/21.
The fiscal commission, which is led by economist Paul Johnson, rules out devolving other tax such ascapital gains tax, inheritance taxand stamp duty on shares.
On stamp duty land tax (SDLT), the report said: While it only raises 80mper annum, given the lower values ofproperties in Northern Ireland, relative to UK, there is a case for having different rates of SDLT inNorthern Ireland.
"As a tax on property, SDLT is well suited to devolution and has been successfullydevolved to Scotland and Wales, and significantly reformed by the Scottish Government.
Werecommend full devolution of revenues and tax powers relating to SDLT.
Mr Johnson said: Devolving additional powers would increase the accountability of the Executive to the people of Northern Ireland and provide additional tools to boost the economy, raise or reduce the taxes of local people and change behaviours.
While this period, with no Executive in place, might feel like an odd time to be launching our report, tax devolution wont happen overnight. It will require time to consider, to build consensus and to plan carefully. It is our hope that all the parties will take the opportunity to consider our report as they prepare for the resumption of devolved government.
We also recommend the full devolution of stamp duty land tax, landfill tax and air passenger duty. We recommend that if these taxes are devolved, the Executive should establish a local revenue authority to administer them.
"This will increase the accountability of local politicians in respect of these taxes and provide for greater policy flexibility and innovation, while also building institutional capacity in Northern Ireland.
And in the longer term, it said that there would be value in the NI Executive seeking devolution of excise duties for fuel, alcohol and tobacco.
But Mr Johnson saidthere were pros and cons to fiscal devolution. If revenues were to grow more slowly than in the rest of the UK then Northern Ireland could lose out.
However, some tax devolution could be an important step towards a more accountable devolved government for the people of Northern Ireland.
Finance Minister Conor Murphy said the report identified potential benefits from greater local control of taxation.
It would give us more options to grow the economy, raise revenue for public services, and encourage the transition to zero carbon, he said.
"This report provides a solid evidence base to start a public conversation on tax and will enable a future Executive to consider how fiscal matters could be best managed here.
Read more here:
'Give Northern Ireland Assembly more tax powers,' report says - Belfast Telegraph
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