Wales politics

Owen Smith MP: '£1bn loss' if Wales had tax power

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Media captionShadow Welsh secretary Owen Smith thinks Wales would be £1bn worse off with own tax powers

The Welsh government would be about £1bn worse off had it been responsible for raising some of its budget through taxes over the last four years, the shadow Welsh secretary said.

Owen Smith said a shrinking tax base due to lots of low-wage jobs should "start alarm bells" about proposals to devolve tax-varying powers.

The UK government's Wales Bill would hand over powers for some taxes.

They would include partial control of income tax after a referendum.

Mr Smith's comments come after First Minister Carwyn Jones said he would accept even more powers, matching those on offer to Scotland - but only if Wales got a better funding settlement from Westminster.

Mr Smith, the Labour MP for Pontypridd, said that "the first and most important task" was to make sure Wales is not "underfunded".

He said his party wanted Wales to be offered the "same deal as Scotland", adding: "It would then be for the Welsh people to determine whether we wanted to take up those powers."

'Safety and solidarity'

Tax receipts across the UK have "collapsed catastrophically over the last five years", he said, adding that the rate of growth in the Welsh tax take was less than that across the UK.

He told BBC Wales' Sunday Politics programme: "That means I think that on analysis of the numbers that were given to us in the autumn statement Wales would maybe be around a £1bn worse off had we taken responsibility, had we been forced to take responsibility for income tax varying powers back in 2010.

"And that makes the point I think that the volatility in income tax generally means it is far more difficult for Wales to take on that responsibility outside the safety and the solidarity of the Union.

"So it makes a point I think about the risk that we are being asked to bare in Wales."

The Office for Budget Responsibility (OBR) has published details of how much the Welsh government would take from taxes if it had the powers set out in the Wales Bill, including its slice of income tax.

The OBR estimated the Welsh government would have had control of around £2.2bn of taxes in the current financial year, rising to more than £2.8bn in 2019/20.

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