A leading group of economists is to publish a report today outlining options on devolution for the Scottish Parliament. Last night claims that they will recommend significant new powers over taxation for Holyrood were hotly denied.

The expert group will instead hand over the details of a year-long investigation into fiscal powers in parliaments around the world to Sir Kenneth Calman's commission and it will be for him to decide which model to opt for.

The report, led by Professor Anton Muscatelli, is understood to have examined options including VAT and stamp duty raised in Scotland being handed over to Holyrood - a model favoured by the UK Government as it would end Holyrood relying solely on the £30billion block grant from Westminster which could help ease tensions in England without devolving further powers.

It also looks at the possibility of giving the Scottish Parliament the power over income tax. The report will not come down on the side of any particular model and will leave any recommendations on fiscal powers to the Calman commission which ordered its evidence-gathering work to be carried out. Suggestions that the economists favoured greater power over taxes being transferred to Edinburgh were dismissed by the UK Government yesterday.

A source said: “That is untrue. The report is a survey of what goes on in other places around the world. It will tell us about the principles of various systems and the trade-offs involved, but it will not recommend anything.”

The report examines regional economic models operating in Australia, Spain, Germany and Canada.

Speaking before the report's publication Professor Calman said: “They all have drawbacks and I suspect one of the conclusions is that there is no obvious model.”

Professor Calman also pointed out: “Whatever financial system he [Professor Muscatelli] wants has to be decided by the kind of constitutional settlement we have.”

The Calman commission was set up to examine how devolution works ten years on from the Scotland Act which set up the Scottish Parliament. The commission is backed by the three main unionist parties in Scotland who believe that Scots are in favour of a strong parliament but one which works within the UK framwork.

The Scottish government yesterday claimed that the Calman commission was falling short of what was required.

A spokesman for Alex Salmond said: “We know that the UK Government is opposed to any real financial powers for Scotland, and now it seems that the Calman commission is falling short of what is required. What the Scottish Parliament needs is control over Scotland's resources as well as borrowing powers to allow it to respond to economic circumstances, which it can't do within a fixed budget. The need for such powers is glaringly obvious in the current economic circumstances. Labour's position on the question of more powers for the Scottish Parliament is a patchwork of confusion and obfuscation.”

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