Tag Archives: hypothecation

Opinion: Federalism and hypothecation do not mix

I was dismayed to read in Mohsin Khan’s recent piece calling for an NHS contribution that the leadership is, again, considering an NHS tax.

How history repeats itself. Ten or so years ago, when working for the Welsh Party, I opposed plans for what the Federal Policy Committee was then also referring to as an NHS contribution. My contention was, and remains, that a commitment to a Federal UK is not compatible with hypothecated taxation.

Whilst taxes are collected at a UK level, spending priorities are determined by devolved institutions. In our devolved context, any claim that a tax is truly hypothecated is simply dishonest. We could not guarantee that a centrally collected NHS tax would be spent on the NHS in Wales, Scotland or Northern Ireland.  It is impossible to require a particular portion of taxation to be spent in the devolved nations on specific areas without requiring them to do so by law.  This would laugh in the face of the liberal principle of subsidiarity and is clearly a non-starter.

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