This preview shows page 1. Sign up to view the full content.
Unformatted text preview: ts much larger neighbour, which – for most of the time – is
unconcerned about, and ignorant of, developments in Scotland. There are parallels in that Canadian nationalism is, in
part, defined relative to the United States (Helliwell, 2001). There is some similarity between the economic pressures
from the North American Free Trade Area (NAFTA) and those from the EU, though a bigger difference is to be found in
that increased economic integration is not presumed to involve either monetary or fiscal integration. The fiscal history of
Canada and, especially, that of the United States, where federalism has been explicitly viewed as a restraint on
government size, has led to much less concern about the fiscal viability and health of sub-national governments (Riker,
1996). There is much more willingness to leave fiscal discipline to the capital market, rather than the surveillance which
has been adopted by Ecofin.38 Although the United Kingdom, unlike Canada, does not have a constitutional commitment
to fiscal equalization, there is a deeply embedded political commitment to the principle of broadly equal standards of
public service provision across the United Kingdom.39 The differences in provision which are now attracting increased
attention are partly a consequence of political compromises and partly a reflection that the UK fiscal system has been
non-transparent. Whereas Canada exhibits a high degree of revenue decentralization (Boadway and Watts, 2000), the
United Kingdom will remain highly centralized. Indeed, the UK Government will simultaneously resist EU pressures for
tax harmonization (arguing the case for tax competition) and devolved pressure for modest measures of tax
decentralization (arguing that these would be distortionary). Even without EU pressures for tax harmonization, the UK
Exchequer’s loss of revenue from tobacco and alcohol excises, together with the criminalization of parts of the
distribution system, will lead to major reductions in excise levels, which are currently much higher than in the relevant
parts of continental Europe. Distance provides less protection than in Canada for differentiated excise systems.
Fourth, the UK Government has no power to spend its own money on devolved functions, so that, in this respect, the
devolved bodies are more effectively protected from UK government intervention than are the Canadian provinces,
which have long complained about the Federal Government’s use of its ‘spending power’ (Boadway and Watts, 2000) to
override provincial policy preferences. An obvious caveat is that a UK government has control over the tax/transfer
system and there might well be circumstances in which this could be used to override the policy preferences of devolved
38 39 276 This issue, of there being no English counterpart to generate formula consequences, already arises in the case of water and sewerage, privatized in
England and Wales but not in Scotland and Northern Ireland.
There has been considerable conflict between the UK Chancellor of the Exchequer (Gordon Brown MP) and Ecof...
View Full Document