Northern Assembly could get tax powers

The Assembly could be given power to vary income tax once the devolved administration is bedded down, an influential think tank report said today.

Stormont can only make decisions on domestic and business rates.

It has unsuccessfully lobbied the UK Treasury for a lower corporation tax on businesses to help them compete with the rest of Ireland.

The Institute for Public Policy Research (IPPR) said: “Under a revised model the devolved administrations might be given wider powers to vary the rate of personal income tax.”

It added that Westminster would need to regulate competition between UK regions to set the lowest rate.

Control over stamp duty, environmental, alcohol and tobacco tariffs may also be considered alongside ringfencing part of the VAT returns.

Tax changes ruled out in the IPPR’s paper, 'Fair Shares: Barnett And The Politics Of Public Expenditure', included VAT, which cannot be devolved due to EU rules.

However, a proportion of VAT could be assigned by regional parliaments for use in areas where they were raised.

Other options could include gambling and tourist charges.

Devolving corporation tax raised doubts because of the danger of competition between different regions of the UK to attract businesses and threatened infringement of EU state aid and competition laws.