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Greater Holyrood powers required- Press and Journal

Press and Journal, 19 October 2009

The recession has strengthened the case for Holyrood to have greater financial independence, a leading think tank has said.

But Reform Scotland warns that in the short term there will need to be spending cuts or tax rises in order to address the UK’s fiscal deficit.

The think tank is now calling for preparatory work to start on the Scottish Parliament assuming more powers, so that these can be quickly implemented after political decisions have been taken.

A report published yesterday states: "If additional fiscal powers are to have a real impact on the governance of Scotland and on the performance of the Scottish economy, they must be of a scale that is great enough to address the fundamental defect of the current devolution settlement – its lack of financial accountability.

"This can be achieved within the context of the UK if both the UK and Scottish Governments are given responsibility for raising the taxes required to fund their spending proposals."

Yesterday’s report by economist Graeme Blackett and law and tax expert James Aitken updates the paper they published last year.

The four main parties at Holyrood now support increased fiscal powers.”

It comes after a report by the official body set up to look into the devolution backed a shake-up of the financial arrangements.

The Calman commission reported in June and recommended income tax rates in Scotland should be 10p lower.

The Scottish Parliament would then determine a “Scottish rate” of income tax, the proceeds of which would go to Scotland.

Scotland would also get powers over some other taxes – air passenger duty, stamp tax duty, land tax, the aggregates levy and land-fill tax.

But the trade-off is that Scotland would then lose some of its present block grant, currently about £32billion.