A Scandinavian ‘high-tax, high-spend’ model for regions? The impact of enhanced regional fiscal autonomy

Abstract

The fiscal powers of the Scottish Government have increased significantly, resulting in the first (modest) regional differences in income tax rates within the UK. In fact, the current degree of fiscal autonomy would permit a radical shift towards a high-tax, high-spend "Scandinavian model". We find that the impact of such a change on the Scottish economy is likely to be positive only if the public value the increased public spending and are willing, and able, to accept a corresponding reduction in their take home pay. We conclude that the current bargaining system is unlikely to deliver such an outcome.

Universal Basic Income as an instrument of regional development policy: a micro–macroeconomic analysis for Scotland

“…The public sector comes closest (with average unionisation rates of 61%, while private rates are around 14%, Emonts Holley et al, 2019), but implementation of a social wage in this sector, while moderating any adverse macroeconomic consequences, would open wide net pay differentials between the public and private sectors. 23 Cleary much work would need to be done across the policy spectrum in any region before a UBI could be introduced with confidence that it would not have a negative impact upon economic outcomes.…”

How fiscal policies affect energy systems: the importance of an ‘environmental social wage’

“…This generates outcomes which are the mirror image of those described in the results section for the case of the increased public consumption. The net impact depends on the relative sizes of these countervailing demandand supply-side forces (Lecca et al, 2014;Emonts-Holley et al, 2016. In the present case, as indicated in Table 3, the result is a clear reduction in aggregate economic activity.…”

“…4 We begin by comparing the energy consequences of tax and government expenditure changes separately. We then analyse the impact of a rise in the average income tax rate with an imposed balanced budget, so that there are matched increases in Scottish public spending and revenues, building on the work of Emonts-Holley et al (2016 to accommodate the notion of an environmental social wage.…”