Déjà vu ... now in French and Dutch too

For those of us who are following the situation in Belgium, I thought this article from De Tijd shows striking similarities to the discussions of the Calman Commission in Scotland and our own Holtham Commission in Wales:

Parties start discussions on new financing act

The work group assigned to draft a new financing act set to work yesterday. The seven parties deliberating on state reform scrutinised the principle agreement for an amended financing act, which was concluded at the end of August. The principles include, among others, more fiscal autonomy for the federated entities without structurally impoverishing the regions. The latter was discussed in depth yesterday.

The Flemish parties are in favour of more fiscal autonomy for the regions, believing it could be done through a transfer of a portion of personal income and/or corporate tax for the regions, making them responsible for their own income and fiscal policy. In their view regions with a good policy must be rewarded, but those with a poor policy will be penalised. The possibility of the corporate tax being transferred to the federal states is however minimal. The Flemish parties SP.A and Groen! made it clear yesterday that they were not in favour of such a transfer, making rebates on corporate tax more of an option.

As far as a partial transfer of personal income tax is concerned, all Flemish parties seem to be in agreement. The Flemish Nationalists of N-VA defend the most far reaching fiscal autonomy. They want to scrap the existing dotations to the regions and communities and offer the regions and communities responsibility for the collection of a large portion of corporate and personal income tax.

The French-speaking parties are keeping a distance, pointing to the fact that as yet the regions could grant a 6.75 percent rebate on personal income tax, but that they failed to use it to the full. If an agreement is reached on the new financing act during the course of next week, an independent institution will calculate the financial impact on each region. Should the work group manage to make significant progress next week, government formation could be addressed.

De Tijd, 23 September 2010

The issues are almost exactly the same for them as they are for us in Wales and Scotland. The obvious main taxes to devolve are personal income tax and corporate taxes. There seems to be more of a consensus for devolving a proportion of income tax ... but more of a resistance to devolving corporate taxes, particularly from the left. My view is that it's essential to be able to control both, because it is only the balance between different sorts of taxation that enables government to have effective control of the economy.

However the sentence about "rebates on corporate tax" as an alternative to devolving those taxes does strike me as interesting. I've no doubt that details will unfold in due course. However, what emerges might well be a model for how we deal with our own corporation tax. As I've commented before, one of the few good things about the ConDem coalition's programme for government is the promise to consider a mechanism for reducing corporation tax in the north of Ireland. But a different rate cannot be imposed by central government, it can only be done within the parameters set by the Azores Ruling, which mean that the rate has to be set by the devolved government itself and that it must bear the financial consequences of its decision. But there is no reason why the mechanism that is eventually decided should not be applied to Wales and Scotland so that we can make our own decisions about corporation tax as well.

So it appears that Belgium has something to learn from us, and that we have something to learn from them. Perhaps my Dutch-speaking friend in Plaid's research team (you know who you are) would like to be a fly on the wall for this one.