Devolving income and tourism taxes to England’s counties could generate over £4bn annually for investment in local services and to drive economic growth, according to a new report.
The research from Grant Thornton UK, commissioned by the County Councils Network (CCN), argues that giving fiscal devolution powers to county and unitary councils across England could be ‘transformational’.
These would not take the form of tax rises but would instead decentralise a proportion of locally-raised revenue, giving local leaders the financial firepower to invest in growth, create jobs and build homes.
Responding to the report, the CCN says that the report puts forward a vision to take devolution to the next level, urging government to be ‘bold and ambitious’ in considering its proposals.
It would help fulfil the government’s missions whilst generating a yearly £4.4bn investment pot for councils and a powerful incentive to increase productivity as proceeds would increase if the local economy performed well.
The report Fiscal devolution: The report sets out some options for how a greater proportion of money can be retained locally, without raising national taxation:
- Giving local areas the ability to retain any better-than-expected income tax growth could raise £3.8bn a year for county areas and could dramatically incentivise job creation.
- The introduction of a flat-rate tourist tax, common throughout the world and even at a rate of just £2 a night would generate around £209m in extra revenue in county areas per year.
- Taken together, these measures could raise close to £4.4bn in county areas, which is around 10% of an average county authority’s budget. Nationally, these measures could raise around £8.9bn a year.
Cllr Richard Roberts, Economic Growth spokesperson for the County Councils Network, said:
“The report from Grant Thornton shows the art of the possible for fiscal devolution and we believe these proposals warrant serious consideration from government and from existing mayors. There has never been a better time consider empowering local areas with fiscal devolution and let’s be clear: this is not about new taxes for local residents and businesses.”
