Monday, 19 November 2012

Silk and taxes

Community councils have it, County Councils have it, the Westminster government has it, even those dreaded European’s have it and maybe, just maybe, the Welsh Assembly might have it. What? you may ask. The right to raise some of its own cash from taxes.

A Commission set up by the Westminster government under the Chairmanship of Paul Silk, has come to the startling conclusion that the Welsh government would be more responsible with its money if it had to raise it itself. It needs an year long Commission to tell us what is obvious to anyone that manages a household budget.

They put in much grander language though. That’s the benefit of a posh education for you. “Devolving tax and borrowing powers to Wales would empower the Welsh electorate and Government, increase responsibility.” 

The report  called ‘Empowerment and Responsibility:  Financial Powers to strengthen Wales’ has  33 ways to make the Assembly more grown up and responsible. 

By grown up it means not giving it the powers straight away ‘cos in their light, the Assembly is seen as some wayward teenager. The Commission’s task is to make the Welsh Government learn to be responsible.  And the way to do it? That well and trusted principle of not allowing anyone to run before they’ve learned to walk.

The polite way of saying it without  causing upset. “The proposals to give Wales its own tax and borrowing system for the first time represent a significant change which should be implemented step-by-step to build experience and balancing risks to the Welsh and UK budgets.”

So the Assembly is given the equivalent of a paper round - taxes that don’t generate to much tax. These are landfill tax, stamp duty land tax, and an aggregates levy.  Also business rates should be fully devolved. 

Just to underline the point that the Assembly only get the right over the cash a bit by bit. They say that  Air Passenger Duty should be devolved for long-haul flights initially, with future full devolution possible. So that occasional flight to distant lands from Cardiff you can have the money from, but the large numbers going to Malaga on holiday generating loads of cash, well CarwynJones can forget that. It’s far to much cash and that amount of cash would just go to Carwyn Jones’s head. 

One day children you’ll inherit the earth. Well, if the Welsh people  agree after yet another referendum perhaps not the earth but certainly power over income tax. 

Meanwhile to help you learn all about it we’ll make it a shared responsibility between Cardiff Bay and Westminster, with the Welsh Government being able to vary income tax rates within the UK income tax structure.

They do acknowledge that Wales might have been short changed in the past and that the proposals on income tax should not go ahead until the heads of Jane Hutt and Danny Alexander are knocked together and they resolve the issues of fair funding in a way that is agreed by both the Welsh and UK Governments.

All in all if the report gets the green light about a quarter of Wales’s spending will be raised in taxes raised in Wales. 

The report is now in the hands of David Jones, the Secretary of State to do with it as he sees fit.


  1. Sounds to me like devolution in Wales will be coming to an end. I know of absolutely no-one that wants Wales to have its own tax raising powers!

    Let's get back to being a united England & Wales. Life was always so much simpler back then.

  2. Anon 11.16 - Yes, lets get back to Englandandwales when Wales didn't exist and we could pretend there wasn't that blincking Welsh language and stuff.

    Oh, and Ann 11.16 let's have another referendum to see if people want to give Westminster and their local councils tax varying powers too?

    Why can't Labour just get their house in order? All parties can agree on this and then there's something called an 'election' where people can vote on it. Labour and Silk Commission treating Wales like children again.

    At the moment the referednum will cost most to run than the money the Assembly can collect through taxes.

  3. This isn't a revolutionary step forward. It's common sense. If anything, part 2 of the Silk Commission is more important.

    Labour and the Tories insisting on a referendum for this is a real shame. Holding another referendum doesn't speak of a confident, democratic Wales. It suggests there is going to be a really technocratic referendum where the result is again a foregone conclusion.

    This lack of confidence has been built in to the whole devolution process.

  4. The devil in the detail regarding the income tax referndum is that if the recomendations are implemented - the Assembly will be assigned half the income tax takings (with the block grant proprtionatly reduced) BEFORE the referendum and Carwyn/LAbour are fully signed up to this. So if the income tax takings go down (as they have done in recent years) the money the Welsh Govt recieves will go down. Which is a good incentive to do your upmost to get the economy working, however, it does seem a strnge to sign up to this without the powers to vary the rate accordingly. For all the fuss Labour have made about the devolution of income tax it seems that they've signed up to a major draw back of it (at least fro them electorally) without any of the advantages.

  5. I can't work out whether they (Labour) have done that, Anon 14:42. Toby Mason of the BBC on Twitter is reporting Carwyn Jones as saying there must be fair funding- an extra £350m- before any devolution of taxes.

    Again I don't know whether that includes the small taxes, but it definitely covers income tax.

    With fair funding Wales could afford to "take the hit" of income tax take going down. It's a pretty iron cast position for Labour, if i'm understanding it correctly.

    Some of the Tory comments on this haven't helped. People like Alun Cairns seem to be missing the point and want to use "accountability" to punish the Labour Government and stop them "whinging". This makes Labour back off, and makes reform less likely to happen. Crucially, Cairns himself (and other right-leaning Tory MPs) probably doesn't want reform to happen anyway. Labour has to accept accountability/responsibility, but it is not unreasonable of them to also ask for fairness.

  6. This is no big deal, a totally pointless referendum will cost about as much to hold as we'll be able to raise from these puny taxes!

    Wales treated like a juniour school kid as you said Gareth.

    C'mon Carwyn, just get on with it.

  7. Of course nobody wan't tax raising powers.... if you ask whether the Assembly should have tax lowering powers, well that, that is a different question. And really, I cannot see the Welsh Government ever increasing a tax like income tax (yes maybe landfill etc) as it would turn people away from devolution. This can only ever go down.

    As to a Referendum- from may Law lessons, all I thought was needed was an Act of Parliament to allow a tax. Why do we insist on one in Wales? Frankly I don't see the point. Particularly because polls after polls suggest there is support out there for it anyway.

    To the taxes- the most important ones are not being devolved!. The only one I can see that could benefit Wales in any way (economically) is the Air Passanger Duty as it would be lowered and benefit Cardiff Airport. Income tax don't really benefit. But Corporation Tax do- imagine how much easier it would be for the Economic Development Department of the WG to go to these trade fairs and say "yes, you could go to Manchester, but you'd pay 2% less in tax if you came to Wrexham etc". This in my view is a key if not the most important tax that can be devolved.

    If the US can do it for their 50 states- surely we can for our 4 nations?

  8. Deovlution of income tax-varying powers should require a popular referendum for approval. This would represent a significant constitutional change and therefore a referendum is justified. It happened in Scotland in 1997 when voters approved it. Why should the people of Wales not have their say, too?

    The people who say 'well, most people support tax-varying powers anyway, so there's no need for a referendum' are missing the point. The next time we're due an election, shall we just say, 'well, the polls say X party are ahead by quite some distance, so we might as well not bother with the election and let them form the government'? What a silly argument.

    I suspect those who don't want a referendum on powers to vary income tax don't want one because they're afraid such a referendum will be lost. Well, it's down to them to make the pro-tax powers case in any such referendum campaign. I support devolution of income-tax varying powers so I'll happily join them!

    But the main point remains the same - a referendum is required for such a big constitutional change.