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N-56 challenges IFS on fiscal autonomy

Dan MacDonaldAn independence-leaning lobby group has cast doubt on a key UK think tank’s findings on the impact of full tax powers for Scotland.

The Institute of Fiscal Studies last month declared that full fiscal autonomy would leave the country with a £7.6 billion shortfall in its budget.

However, N-56, a loose alliance of businessmen led by the property developer Dan Macdonald (pictured) said the IFS report fails to consider that since the 1980s Scotland made a net contribution to the UK public finances.

It claims that, on average and since 1980-81 Scotland received 9.6% of UK Government spending while being the source of 10.5% of UK taxation revenues.

N-56 also says the IFS forecast is based on an oil price of $55 per barrel, with OPEC predicting that in the long-run the price will return to around $100.

“This would clearly make a significant contribution to Scotland’s fiscal position and could lead to a return to surpluses,” says N-56.

“Moreover, the devolution of substantial fiscal powers to the Scottish Parliament would mean that the Scottish Government would be motivated to put the mechanisms in place.”

N-56 said full fiscal autonomy would add strength to its claims first made last year that Scotland could double the size of the economy through a targeted strategy based around exports, investment in infrastructure and innovation, and a simpler taxation system.

It believes Scottish GDP could increase by 86% from a baseline of £153 billion in 2012 to £282bn over 25 years, elevating Scotland to become one of the top five wealthiest countries in the world.

This would also increase GDP per capita by two-thirds from around £27,000 per capita to more than £45,000.

Such an increase in GDP of £129bn would also result in an improvement in public finances of some £52bn per year.

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