Northern Ireland

Platform: Conor Murphy

Sein Féin finance minister Conor Murphy. Picture by Hugh Russell
Sein Féin finance minister Conor Murphy. Picture by Hugh Russell Sein Féin finance minister Conor Murphy. Picture by Hugh Russell

COMMENTING on the draft budget I brought to the assembly this week, Newton Emerson (column, January 21) laments that “almost all talk is of spending, with almost none about tax”.

Mr Emerson adds that the lack of discussion on tax policy means the budget is only a “half-conversation”.

I agree entirely. The Executive’s limited control over taxation not only undermines local control over economic policy, it also constrains healthy democratic debate.

I have previously announced my intention to establish a Fiscal Commission to examine the scope for the Executive to take control of additional financial powers.

This work has been delayed by the pandemic but the commission will soon be under way.

Similar commissions have already reported in Scotland and Wales.

The commission will be established alongside the Fiscal Council which will provide independent analysis of the Executive’s spending plans and, if the Executive assumes more fiscal levers, its tax plans.

Mr Emerson is critical of my decision not to raise rates next year, which is the one major tax the Executive does control. I disagree for two reasons.

First, business rates are already relatively high here. The high cost of rates is regularly cited as the number one concern of businesses.

Secondly, it would be counter-productive to raise taxes in the middle of a pandemic which has caused huge financial distress for businesses and households.

Taxes should be raised in the good times, not in the bad times.

Greater flexibility to borrow, build up reserves, and carry over money from one year to the next would allow the Executive to operate such a counter-cyclical fiscal policy.

The multi-year budget promised in New Decade, New Approach, rather than the single-year budget that has been provided to the Executive, would also help us plan our finances on a more long-term strategic basis.

Mr Emerson is not quite correct in suggesting that corporation tax powers are already on the books.

Treasury requires that the Executive first demonstrate that it has sustainable finances in place before these powers would be transferred, something the Fiscal Council can examine.

Finally, Mr Emerson criticises the £400k domestic rates cap, under which a house valued at £400k is taxed at the same level as a house valued at £1m. I agree that this cap is unfair and I intend to remove it.

Again, however, the middle of a pandemic is not the right time to increase taxes.

I should also caution that the comparison with London households is not a very appropriate one.

There are a small number of high value properties here which means that abolishing the rates cap will raise a relatively small amount of revenue.

Debate on economic policy is very much part of a healthy democracy.

The Fiscal Commission and the Fiscal Council should help stimulate fresh thinking and informed discussion on economic policy.

Ultimately, more scope to raise revenue and use policy levers should increase the Executive’s ability to deliver its Programme for Government on behalf of the people who elect us.

:: Conor Murphy is finance minister and a Sinn Féin MLA