Wales politics

Owen Smith accused of 'U turn' on income tax powers

Owen Smith
Image caption Owen Smith says Labour would look for more symmetry in the tax powers between Wales and Scotland

Conservatives have accused the shadow Welsh secretary of a U-turn over devolving some income powers to Wales.

Owen Smith said a future Labour UK government would devolve 15p out of the 20p basic income tax rate, if "fair funding" for Wales from Whitehall was agreed and subject to a referendum.

It would also, after a Yes vote, allow Welsh ministers to raise the top rate.

Tory MP Guto Bebb called it a "spectacular change", compared to Mr Smith's recent comments on the issue.

Mr Smith announced the new policy at the Welsh Labour conference in Llandudno on Sunday.

But Mr Bebb, the MP for Aberconwy, said it contradicted recent statements in which he had expressed opposition to the principle of devolving income tax.

Responding to the criticism, Mr Smith said Labour "would not allow" other political parties to use income tax devolution to "deliver a tax cut for the most well-off in society".

Mr Bebb also insisted he had "made it very clear he does not believe in the devolution of income tax".

"This proposal affects more than 50% of income tax, and yet a few weeks prior he was saying it would be a Tory trap," he said.

"If that isn't a pretty spectacular change of heart I don't know what is.

"He is against tax competition and yet it is the very same people also who are prepared to decide different taxes.

"The Labour Party has been flip flopping on this."

The Labour proposals on income tax would only come into being on condition of what it calls a "fair funding" settlement with Westminster and a referendum.

The Welsh government argues it is underfunded to the tune of around £300m a year.

Under proposals in the Wales Bill, currently being considered by MPs, the Welsh government would be able to vary income tax by up to ten pence in the pound, if voters backed the plans in a referendum

Discussing the bill at the Welsh Grand Committee in the House of Commons in February, Mr Smith said: "Let me make it clear that Labour has never sought to devolve income tax-varying powers to Wales.

"The previous Labour government did not see that as a priority and nor do the current Welsh assembly government.

'Triple-lock'

"Carwyn Jones, the First Minister in Wales, when submitting evidence to the Silk Commission, did not request that income tax-varying powers be afforded to Wales and nor did the Labour Party in Westminster.

"We have not changed our minds."

On Tuesday, Mr Smith told BBC Wales: "We don't accept the devolution of income tax is a priority and we are concerned the Tories are devolving income tax to Wales as a way of washing their hands of investment at the UK level - as now looks the case with the electrification of the Valleys Lines.

"However, in response to the government's proposals, we have set out a triple-lock test of 1) fair-funding being addressed 2) a period of assignment showing it's in the interest of both Wales and the UK and 3) it being subject to a referendum.

"Labour would not allow the devolution of income tax to be used by other parties - all of which have signalled they wish to do so - to deliver a tax cut for the most well-off in society when the vast majority of people are facing a cost of living crisis.

"However, we would give the Welsh government the power to guard against more Tory tax cuts for the rich in future by enabling Wales to reinstate the 50p rate for people earning over £150,000."

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