The Welsh Tax Agenda — Rebecca Evans AM
I was very honoured to be appointed Finance Minister in the Welsh Government at an exciting time in our ongoing devolution journey.
As I write this, we are just about to introduce Welsh rates of income tax — the third major milestone in the devolution of tax in Wales.
From April 6, a proportion of the income tax collected in Wales will be retained in Wales to directly fund Welsh public services. Decisions about how much income tax Welsh taxpayers pay will be made in Wales, by the National Assembly, for the very first time.
This year, when AMs voted on the Budget for the year ahead in January, they also voted on the first Welsh rates of income tax. They agreed with the Welsh Government’s proposal that Welsh taxpayers should pay the same rate of income tax as taxpayers living in England and Northern Ireland (Scottish taxpayers pay different rates of income tax as it is fully devolved).
The Welsh Labour Government has a manifesto commitment not to raise Welsh rates of income tax for the remainder of this Assembly term.
From April 6, HMRC will continue to collect income tax from Welsh taxpayers as it does currently — the only difference Welsh taxpayers will notice is that their tax code now begins with a C, for Cymru.
Welsh rates of income tax is the third tax to be devolved to Wales. Land transaction tax and landfill disposals tax were introduced almost a year ago, in April 2018, replacing stamp duty land tax and landfill tax, respectively.
Together, these three taxes will contribute more than £2bn every year towards the Welsh budget — helping to fund our vital public services, such as our schools, hospitals and council services.
We have taken a progressive approach towards setting these tax rates, ensuring that support is available for those with the least.
For residential transactions, land transaction tax has the most generous starting threshold of any equivalent property tax in the UK — properties sold at £180,000 or less pay no tax — but those at the highest end of the market, are subject to the highest rates of tax. The majority of first-time buyers in Wales pay no land transaction tax. We have taken a similar approach to tax rates for non-residential properties too.
We believe that tax should be fair — fair to all those who play by the rules and pay their way.
Wales is the first country in the UK to introduce a higher rate of tax for unauthorised disposals made at illegal tips or at other areas, recognising the damage that waste can cause to the environment.
I believe we need to be open and honest about taxes in Wales. It is important we all understand the relationship between the taxes we all pay and the vital services they fund — services we all rely on, every day.
The devolution of tax powers to Wales means that, for the first time, there is a direct link between the money raised and the money spent in Wales. When people cast their ballot at the next Assembly elections, they will be making a decision at least in part based on what each political party is promising on tax.
But before we get to the ballot box, I want to make sure that people have a say in the development of our existing taxes and an opportunity to shape new taxes in Wales.
Every year, I publish a tax policy work plan, which sets out my and the Welsh Government’s priorities for the year ahead and, alongside the draft Budget in the autumn, I publish the tax policy report, which sets out in detail the work we have undertaken over the past year to develop Welsh taxes.
This year, the tax work plan will focus on our ongoing work to develop tax policy in Wales and to build the tax base. I gave evidence to the House of Commons’ Welsh Affairs Committee inquiry into air passenger duty this month (March) when I set out the government’s case for Wales to be treated in the same way as Scotland and Northern Ireland and for APD to be devolved to Wales.
We will also continue the work to explore the four new tax ideas, which were shortlisted from a long-list put forward by the public to test the new tax powers we have under the Wales Act 2014, which allows us to propose new taxes in areas of devolved responsibilities.
We are currently preparing the case for the powers to introduce a vacant land tax to be devolved to Wales and we continue to explore the potential for a tourism tax and a disposable plastics tax.
Perhaps one of the most important pieces of work we will do as government over the next two years is to look at the long-term options for how we pay for social care, this includes exploring the idea of a social care levy, which was set out by Professor Gerald Holtham. I am a member of the Welsh Government’s inter-ministerial group on social care, which is chaired by the Minister for Health and Social Services.
I look forward to taking forward our exciting tax agenda as Finance Minister and working with people in Wales as we continue to develop our new tax ideas.
To get involved in the conversation about tax in Wales, contact the Welsh Treasury Twitter account @WelshTreasury https://twitter.com/WelshTreasury
@TrysorlysCymru: https://twitter.com/trysorlyscymru
Email: WelshTreasury@gov.wales
TrysorlysCymru@llyw.cymru
Rebecca Evans is the Assembly Member for the Gower and Welsh Government Minister for Finance and Trefnydd.