THOUGH the United Kingdom holds together, just, its four member countries form an ever-looser union. The Scotland Bill, currently before Parliament, is likely to adopt many of the proposals of the Smith Commission, set up following the independence referendum last September, and stipulate that the Scottish Parliament control 60% of public spending in Scotland (up from 50% now) and 40% of taxation (up from 15%). Northern Ireland and Wales may be granted similar privileges. Meanwhile David Cameron, Britain’s prime minister, argues that English MPs should have exclusive say over fiscal matters that affect only England.
Much about fiscal devolution is appealing. There is some evidence that it lifts productivity—worryingly stagnant in Britain—since regional governments make better investments in local infrastructure. It is consistent with the idea that representation and taxation should be closely linked: if Scottish voters want a higher-tax, higher-spending system, should they not get it? And it has political appeal, too. Mr Cameron hopes that fiscal devolution will weaken the case for independence made by the Scottish National Party.
A paper presented on July 21st at the National Institute of Economic and Social Research makes an economic counter-argument. Like the euro zone, Britain is a monetary union: one central bank, the Bank of England, sets a...Continue reading
via Brian Rushton, Athens-upon-Clyde
No comments:
Post a Comment