In his latest City AM column, KPMG’s Head of Tax Policy Tim Sarson examines the UK government’s proposals to devolve greater tax-setting powers to combined authorities and regional mayors. The article argues that fiscal devolution can incentivize local economic growth, improve accountability, and allow tailored tax policies for regional priorities such as housing, skills, and green investment. However, Sarson warns of significant risks: a ‘race to the bottom’ in business rates or council tax, increased complexity for businesses operating across multiple jurisdictions, and potential erosion of the national tax base. The piece calls for a clear fiscal framework, equalization mechanisms, and strong central coordination to prevent harmful tax competition.
Key Takeaways
- Local Growth Incentives: Devolved taxes such as business rate retention and tourism taxes can align revenue with local policy objectives, fostering innovation in public service delivery.
- Compliance Burden for Business: Multi-site businesses face multiple tax regimes, filing requirements, and dispute resolution mechanisms, increasing administrative costs.
- Need for Fiscal Guardrails: Without central standards and equalization, devolution could exacerbate regional inequalities and undermine national fiscal objectives.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement