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Report says recession has increased argument for more Holyrood financial independence- STV

STV, 19 October 2009

A think tank says that the global recession has strengthened the case for Holyrood to be given more financial independence.

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

The report says: "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."

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

It comes after a report by the official body set up to look into the devolution set-up backed changes in the financial arrangements. The Calman Commission published its report in June and recommended income tax rates in Scotland should be set 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 duty land tax, the aggregates levy and landfill tax. But Scotland would then lose some of its present block grant, currently about £32billion.

Reform Scotland is now calling for preparatory work to get started on the Scottish Parliament assuming more powers, so that these can be quickly implemented after the political decisions have been taken.