Wales offered tax raising powers

 

David Cameron and Nick Clegg made the announcement in Cardiff Bay

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The Welsh government will be offered some control over income tax subject to a referendum, Prime Minister David Cameron has said.

Speaking in Cardiff Bay, he and deputy PM Nick Clegg announced new financial powers for the devolved administration.

They include control of the stamp duty paid by house buyers and powers to finance upgrades on the M4.

It follows the publication of a report last year which said the Welsh government should have new tax powers.

At present Wales' devolved administration cannot vary taxes or borrow money, and gets its budget in a grant from the Treasury.

Last November the Silk Commission, set up by the Westminster coalition, said the Welsh government should be responsible for raising some of the money it spends.

'Opportunity to decide'

It included a recommendation to devolve powers to vary a portion of income tax by 2020, following a referendum.

Nick Clegg and Kirsty Williams Deputy PM Nick Clegg with Kirsty Williams AM at a new sustainable community in Newport

Mr Cameron said Wales will be given borrowing powers, control of landfill tax and stamp duty, and a House of Commons bill giving permission to hold a referendum on the devolution of income tax.

"Today is about a strong and responsible future for Wales," he announced at the Senedd in Cardiff Bay.

"Today we are announcing more power for the Welsh people and the Welsh government.

"Power that's about building this country up, power that's about making sure we have real accountable government here in Wales.

EFFECTS OF ANNOUNCEMENT

  • A Welsh treasury
  • Presiding Officer Rosemary Butler has repeated a call to increase the number of AMs from 60 to 80 to reflect the "increasing workload"
  • The First Minister Carwyn Jones wants a new Menai Bridge, financed by the fresh borrowing powers
  • Improvements to the A55 in north Wales
  • Upgrade the M4
  • Major hospital developments

"And power that's about ensuring what I want and what I know what the deputy prime minister wants and the first minister wants, which is a strong Wales inside a strong United Kingdom."

Mr Cameron said the decision will give new borrowing powers to make improvements of the M4 which, is a "foot in the windpipe of the Welsh economy".

Land tax and stamp duty will also be devolved.

"I think it is good for a government to be responsible for raising some of the money it spends," Mr Cameron said.

Mr Clegg said it was a "significant" moment for Wales and "further conversations" could be had in the future about more devolution powers.

"It is not the end, we look forward to seeing the recommendations in the second part of Silk," he added.

Mr Cameron went on: "We are going to put forward a bill in the House of Commons for a referendum. It will be their (Welsh government) decision whether to trigger the referendum.

ANALYSIS

The debate in Wales has been about how strengthen devolution and make the system work a bit better.

The most significant development is Wales would have the power to vary income tax, subject to a referendum.

David Cameron says it is all about Wales taking responsibility.

There are some politicians already talking about cutting taxes in Wales, but that is still 10 years away.

"If they do, it will be for the Welsh people to decide if they want these new powers."

Mr Cameron also announced the Nato summit will be held in Wales in 2014.

'Showcase modern Wales'

"There will be as many as 60 heads of state and government coming to this important Nato conference, it will be the first time since 1990 that the United Kingdom has hosted this conference - the most important defence alliance that we have," he said.

"I'm delighted we're going to be doing it right here in Wales. I think it will be an excellent opportunity to showcase the best of what modern Wales has to offer the whole world.

"It'll be good for jobs, it'll be good for investment, it'll be good for business. It'll be a great advertisement for the success that Wales and the Welsh economy is."

Mr Cameron went on: "Scotland has got the Commonwealth Games, London had the Olympics, Northern Ireland the G8, now it's Wales' turn."

Mr Cameron said he looked forward to campaigning in Wales as a 'low tax Conservative'

First Minister Carwyn Jones said he was "delighted" at the announcement of the Nato conference.

"Dozens of heads of government will attend the Nato Summit," said Mr Jones.

"Obviously these will include the Heads from Nato's Member States in Europe and North America but also, I understand, delegates from many countries beyond Nato's borders.

"This is a brilliant chance to showcase Wales," he said.

Speaking about the announcement of the tax raising powers, Mr Jones, who had previously criticised the delay in the announcement from the UK government, said: "Today is an important day for Wales. We are now being treated like equals in the UK.

"We are not in favour of devolution of income tax until the Barnett formula is reformed to provide fairer funding for Wales.

"We need to be able to borrow to improve our infrastructure, such as the M4 around Newport as well as the A55 in north Wales.

"This announcement today goes a long way to show devolution works and further strengthens the UK."

Mr Jones later told BBC Wales that the M4 relief road proposal was still out to consultation and there had been "no final decision".

"We know there's an issue surrounding the traffic flows around the Brynglas tunnels that will need to be addressed somehow but, of course, that consultation is still ongoing," he added.

Welsh Secretary David Jones said on Twitter the UK government is committed to giving the Welsh government "tools it needs to renew" its infrastructure.

"These measures will make the Assembly & the Welsh Government more accountable to the people of Wales who elect them," he added.

WHAT THIS MEANS

Having more powers is one thing but, of course, it is how you use them that really matters.

The Welsh government will now be able to borrow money, like other devolved administrations.

Ministers have already indicated that this will fund the M4 relief road around Newport.

Business leaders, including the CBI Wales, have welcomed this as a vital improvement that will benefit the economy.

The Federation of Small Businesses disagrees. It says small and micro businesses would benefit more if the expected £1bn that is planned for the M4 was spent on other projects including road improvements across Wales rather than in one area.

Stamp duty will also be devolved. At the moment house buyers start paying it at £125,000. If that was increased, it could give a boost to the housing market.

While the Welsh government got most of the smaller taxes it wanted. It did not get the power to vary long haul air passenger duty that was recommended by Silk.

It had hoped to use this to attract airlines offering transatlantic flights from Cardiff Airport.

While it is certainly a historic day, it is worth remembering - taxes can go up as well as down.

Following the announcement, Finance Minister Jane Hutt revealed a new Welsh treasury will be established.

"We've always said we want these powers for a purpose. We now have the tools we need to boost the Welsh economy.

'Significant step forward'

"This is a step forward for a maturing democracy. We will now press ahead with establishing a Welsh treasury.

"Powers for a purpose. Borrowing for a purpose. We now need to get on and improve our infrastructure and boost our economy."

After the announcement, Presiding Officer Rosemary Butler repeated her call for more AMs.

"This is a significant step forward in our growing institutional maturity as a fully fledged legislature," she said.

"This announcement today reaffirms, in my view, the need for an assembly with greater capacity and with more AMs to robustly scrutinise the Welsh government on what will be important and difficult decisions around Welsh taxation and borrowing."

After the press conference, Mr Cameron and the Welsh secretary visited Owens Logistics, in Newport, to discuss the importance of the M4 upgrade. Meanwhile Mr Clegg visited a £1bn sustainable community called Glan Llyn being built on the former Llanwern steelworks site.

 

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  • rate this
    -5

    Comment number 178.

    Whoever is in power in the Welsh Assembly in 10 years time, will they have the courage to reduce Income Tax to 10% and give the Welsh Economy a much needed boost?

    More money to spend means a boost for businesses who then expand and take on more staff. New firms starting up. More Investment from outside Wales.

    All good for Wales.

  • rate this
    +38

    Comment number 115.

    All we in wales will end up with is more higher taxes and far more politicians and civil servants
    Politicians only ever want more of our money for themselves and their friends.

  • rate this
    +26

    Comment number 62.

    How on earth would income tax work? You live in Wales but work in England or vice versa.

    Mind you Wales could become a tax haven offering a 10% rate, afterall 10% of something is better than 30% of mass unemployment.

  • rate this
    +8

    Comment number 13.

    Make no mistake, Cardiff are spenders and the only way taxes for us poor sods on the wrong side of the border will go is up.

    The only question is whether you will be more deafened by the stampede leaving for England or property prices crashing.

  • rate this
    -11

    Comment number 6.

    Not being resident in Wales, I've no problem if they want to raise taxes but would object if they reduced them- England subsidises Wales as it is.

 
 

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