Welsh Secretary calls for lower income tax rates

Should the Welsh government get the power to vary income tax rates? And if so, how should it use them?

The first question is one for the voters - if politicians in Cardiff agree to trigger a referendum on the subject. The second question is one for political parties.

This afternoon, Welsh Secretary David Jones has offered his own answers - yes, and it should use them to cut income tax rates (20p, 40p and 45p in the £) by a penny to give Wales a competitive advantage.

He told MPs on the Welsh affairs committee: "They {the Welsh government} will have to be bold enough, if there is a positive outcome of a referendum to reduce the rate of tax and I think we need to decide what sort of government we're going to have. Are we going to have a timid government that is forever going to be a supplicant from the Treasury here in London or are we going to have an innovative ambitious government that wants to make Wales richer?"

Mr Jones believes the Welsh government's enthusiasm for a referendum is "muted" - partly because it senses a trap that will leave it financially worse-off if it acquires some responsibility for income tax rates without a more generous settlement from Westminster.

The secretary of state's comments appear to have provoked something of a turf war with his party in the National Assembly for Wales. A Welsh Conservative source confirmed their support for devolving the power to vary income tax rates. "Therefore tax policy will be made alongside other devolved policy in the National Assembly."

Welsh Tory leader Andrew RT Davies has suggested cutting the 40p rate but that alone won't be possible so long as the UK government allows the Welsh government only to change bands simultaneously "in lockstep".

Back at Westminster, committee chair David Davies asked a question that has not been asked until now. If the Welsh government is to get tax-varying powers, like Scotland, will it, like Scotland, see a reduction in the number of MPs at Westminster? (Scotland has 59 MPs, compared to 72 pre-devolution).

There was relief all round the committee as David Jones suggested the powers he planned to devolve to Wales wouldn't require a cut in Welsh MPs.

Mr Jones declined to answer some questions (such as how much will the newly-empowered Welsh government be able to borrow?) on the grounds that they would be answered in a draft Wales Bill to be published "very shortly...I hope before Christmas". He did confirm that the Bill would include abolition of the ban on candidates in assembly elections standing in both constituencies and on regional lists.

Perhaps the MPs would have got fuller answers if they had waited until the Bill is published before summoning the secretary of state.

Publication date is still a state secret although I'm told it's been pencilled in for a week tomorrow, Wednesday, December 18.

David Cornock Article written by David Cornock David Cornock Parliamentary correspondent, Wales

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