The next item is the statement by the Cabinet Secretary for Finance and Local Government on the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Bill. I call on the Cabinet Secretary for Finance and Local Government, Mark Drakeford.

Thank you very much, Presiding Officer. Yesterday, I laid the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Bill, together with the explanatory memorandum, before the National Assembly for Wales.

The Deputy Presiding Officer (Ann Jones) took the Chair.

The introduction of this Bill marks a significant step in our tax devolution journey and progress in preparing for the first Welsh-specific taxes in almost 800 years. The Bill follows the passage of the Tax Collection and Management (Wales) Act 2016, which received Royal Assent in April. The Act provided the legal framework to collect and manage devolved taxes, including the establishment of the Welsh Revenue Authority—the authority that will undertake the collection and management functions for land transaction tax.

There has been extensive consultation with stakeholders about the content of this Bill and the shape of land transaction tax. I would like to formally thank all those who have contributed to its development. I value their continued involvement in informing the detailed work that still needs to be taken forward under this Bill.

Felly, Ddirprwy Lywydd, bydd y Mesur hwn yn sefydlu treth newydd ar drafodiadau tir yng Nghymru, a fydd yn cymryd lle treth dir y dreth stamp o fis Ebrill 2018.

Yn benodol, mae'r Bil yn nodi egwyddorion allweddol y Dreth Trafodiadau Tir yn Rhan 2, gan gynnwys ba fathau o drafodiadau a fydd yn esgor ar dâl Treth Trafodiadau Tir a phwy fydd yn gorfod ei dalu. Yn Rhan 3, mae'r Bil yn nodi sut y bydd y dreth yn cael ei chyfrifo a pha ostyngiadau fydd yn berthnasol. Mae Rhan 4 yn ymwneud â chymhwyso’r Bil mewn perthynas â phrydlesi a thrwyddedau, ac mae Rhan 5 yn nodi'r rheolau arbennig sy'n ymwneud ag amrywiaeth o bersonau a chyrff, megis partneriaethau neu gwmnïau. Mae Rhan 6 o’r Bil yn cynnwys y rheolau ynglŷn â llenwi ffurflen trafodiad tir a thalu'r dreth, ac mae Rhan 7 yn nodi mesurau penodol i fynd i'r afael ag osgoi talu trethi datganoledig.

Er mwyn ein harwain wrth ddatblygu ein polisïau a'n gweithdrefnau, mae Llywodraeth Cymru wedi dysgu o brofiadau Cyllid a Thollau Ei Mawrhydi a Chyllid yr Alban. Mae'r Bil yn cadw elfennau allweddol treth dir y dreth stamp, gan gynnwys y dull o ymdrin â phartneriaethau, ymddiriedolaethau a chwmnïau, a sut i weithredu gostyngiadau yn y dreth ac eithriadau. Gwneir hyn er mwyn sicrhau cysondeb a sefydlogrwydd, sef yr hyn y mae busnesau wedi gofyn amdanynt, a byddai hefyd yn galluogi proses drosglwyddo ddidrafferth ar gyfer y farchnad eiddo.

Fodd bynnag, ceir rhai meysydd lle mae'r dreth trafodiadau tir yn wahanol. Bwriad y meysydd hynny yw gwella effeithlonrwydd, effeithiolrwydd a sicrhau pwyslais ar anghenion a blaenoriaethau sy'n unigryw i Gymru. Er enghraifft, mae'r Bil yn cyflwyno rheol gyffredinol ar atal osgoi symlach, a fydd yn berthnasol i bob treth yng Nghymru, ac un rheol gyffredinol a chadarn ar atal osgoi, a fydd yn berthnasol i bob gostyngiad o fewn y dreth trafodiadau tir ei hun. Bydd y dull hwn yn ehangu, yn symleiddio ac yn cryfhau deddfwriaeth bresennol yn ymwneud â threth dir y dreth stamp.

Ddirprwy Lywydd, mae trethi'n ariannu'r gwasanaethau cyhoeddus yng Nghymru yr ydym ni i gyd yn dibynnu arnynt. Bydd y Llywodraeth hon yn gweithredu dull cadarn pryd bynnag y bydd o'r farn fod trethi sydd wedi'u gorchymyn yn ddemocrataidd yn cael eu hosgoi yn fwriadol yng Nghymru.

Bydd y Bil yn sefydlu fframwaith ar gyfer pennu cyfraddau a bandiau'r dreth trafodiadau tir. Byddwn yn dilyn strwythur treth ymylol yng Nghymru gan fod hyn yn decach ac yn fwy blaengar, a hefyd yn gyson â'r dull a ddilynwyd yn yr Alban, ac yn fwy diweddar ar draws y DU. Mae'r ddeddfwriaeth sydd gerbron yr Aelodau y prynhawn yma yn cynnwys darpariaeth benodol sy'n ein hymrwymo i weithredu dull blaengar tuag at gyfraddau a bandiau—un o fanteision allweddol datganoli treth dir y dreth stamp yw'r cyfle i sicrhau deddfwriaeth deg.

Caiff cyfraddau a bandiau y dreth trafodiadau tir eu pennu drwy is-ddeddfwriaeth yn nes at fis Ebrill 2018, er mwyn adlewyrchu'r amodau economaidd a chyflwr y farchnad eiddo ar yr adeg honno. Caiff papur ymchwil sy'n cynnig cyd-destun ehangach cyfraddau a bandiau treth dir y dreth stamp yng Nghymru a Lloegr, a threth trafodiadau adeiladau a thir yn yr Alban, ynghyd â'r cyd-destun economaidd, ei gyhoeddi cyn bo hir. Rwy'n bwriadu iddo fod ar gael cyn trafodion Cyfnod 1 y Pwyllgor Cyllid yn y gobaith y bydd hynny'n helpu'r pwyllgor wrth iddo ystyried y Bil. Mae Llywodraethau'r DU a'r Alban wedi gwneud newidiadau i'w trethi trafodiadau tir yn ddiweddar, yn benodol o ran y gyfradd ar gyfer eiddo preswyl ychwanegol. Ymgynghorwyd â Chymru, Lloegr a Gogledd Iwerddon yn gynharach eleni ynglŷn â'r newidiadau yn y DU, ac mae'r ddeddfwriaeth ar hyn o bryd yng nghamau olaf y daith drwy Senedd y DU. Cyhoeddodd Lywodraeth Cymru bapur gan y Trysorlys yn ceisio barn ynghylch cyfradd uwch ar gyfer eiddo preswyl ychwanegol dros yr haf. Mae'r ymatebion a gafwyd yn cael eu hystyried ar hyn o bryd. Dyma fater, ymysg amrywiaeth o rai eraill, Yr wyf yn edrych ymlaen at astudio barn y Pwyllgor Cyllid ar y mater hwn, ymysg eraill, pan gaiff adroddiad Cyfnod 1 y Pwyllgor ei gwblhau.

Ddirprwy Lywydd, y dreth trafodiadau tir yw'r dreth gyntaf o ddwy i'w datganoli i Gymru. Yn ddiweddarach eleni, byddaf yn cyflwyno ail Fil i'r Cynulliad Cenedlaethol er mwyn sefydlu treth gwarediadau tirlenwi. Mae datganoli trethi i Gymru yn galluogi Llywodraeth Cymru i ddatblygu system dreth sy'n symlach, yn decach ac sy'n cefnogi ein dyheadau ar gyfer gwasanaethau cyhoeddus, swyddi a thwf. Am y tro cyntaf ers bron i 800 o flynyddoedd, byddwn yn cymryd y camau cyntaf heddiw tuag at ddatblygu a gweithredu cyfundrefn dreth sy'n gweddu’n fwy uniongyrchol i amgylchiadau a phobl Cymru. Rydym yn bwriadu gwneud hynny mewn ffordd sy'n cydweithio'n agos â'r rhai sydd fwyaf â’r cysylltiad mwyaf uniongyrchol â'r meysydd perthnasol, ac sy’n cadw mewn cof fod angen newid yn ddidrafferth o gyfundrefnau hirsefydledig i drefniadau newydd, a hynny yr un pryd â gweithredu cyfraith sy'n ddigon hyblyg i ddarparu ar gyfer datblygiad unrhyw nodweddion unigryw pellach yn y dyfodol. Drwy wneud hynny, rwy'n credu y gallai'r Bil wneud gwahaniaeth gwirioneddol i fywydau pobl. Rwy'n edrych ymlaen yn awr at y broses graffu a fydd yn dilyn, ac at gyfraniad yr amryfal sefydliadau ac unigolion o fewn Siambr hon a thu hwnt, yr wyf yn gwybod y bydd ganddynt ddiddordeb mewn sicrhau bod y Bil hwn yn llwyddiant. Diolch yn fawr.

First of all, I’d like to thank the finance Secretary for his statement and for sharing it with us prior to making that statement. There’s been a great deal of talk over the past few days, and some excitement, even—at least amongst some—about the historic nature of this Bill that will, along with the Tax Collection and Management (Wales) Act 2016 and the Bill on landfill disposals tax, as has been said, mean that Wales will now levy some of its own taxes for the first time since the days of Dafydd ap Gruffydd, the real last ruler of Wales in 1283.

We welcome this Bill and take pride in its historical significance, but the real significance of these powers will become apparent as they are used and as they are formulated, as the Secretary said, to meet the specific needs of Wales. So, it’s an important duty for this place to ensure that we make full use of these powers, and the starting point for that is the scrutiny for which we will be responsible, in order to show the people of Wales that they can trust in this Assembly to safeguard their interests when it comes to the issue of taxation.

It’s a very technical Bill, and we therefore welcome the fact there was a draft Bill. That gave various organisations across Wales an opportunity to respond to that Bill, and I’m pleased to see that the Government has tried to incorporate within the Bill much of the response to that consultation. On this question of the balance in it between the need perhaps for consistency and stability in moving towards a Welsh framework, and of course then creating a platform for policies that are made to respond specifically to Welsh needs, and policies that may be radical from time to time, there is reference in the statement to the treatment of second homes, and that’s one example of that, and, of course, there’s a consultation ongoing in England on that issue at the moment.

But to what extent should we ensure that this Bill provides sufficient freedom for future Governments to make use of that power to differentiate—for example, looking at the possibilities of regional banding in order to reflect differences in housing markets at a local level, which can be a factor; certainly, it is one of the reasons for this suggestion in terms of buy-to-let homes, particularly because of problems in London? To what extent can this tax be used to meet the objectives of other policies, for example, reflecting the quality of housing in terms of energy efficiency or build quality? That is, I’m asking the question: to what extent can we enable future Governments, not necessarily thinking that we are going to implement that immediately through secondary legislation, but providing as much freedom as possible for future Governments to ensure that we have that range of powers available to us?

In terms of negotiations with the Treasury, of course, the question of the fiscal framework is an issue of great importance that does actually impinge on a wider debate on taxation powers that will go hand-in-hand with the scrutiny of this Bill. Now, if the Cabinet Secretary could tell us where those discussions have reached, that would be very beneficial, specifically if he could respond to the Wales Governance Centre’s report on this particular Bill, looking at the question as to whether the south-east of England and London should be exempted in terms of assessing the changes to the block in estimating the impact on the block of any changes in this tax.

More broadly still, may I tempt the Secretary onto some dangerous ground, perhaps? Because most of the economists looking at this tax and at stamp duty in England have come to the conclusion that it is an exceptionally inefficient tax. Indeed, it is very difficult to justify it. Of course, it is also true that the range of taxes that relate in one way or another to land or property that we’ve inherited—council tax and also, of course, business rates—are all less than satisfactory in one way or another. Is it not time now, perhaps, for us to have a broader inquiry into this whole question of the land and property tax framework for Wales? Because this would be an opportunity to actually discover real Welsh solutions, I think, that would certainly give us a framework that would be more beneficial in the longer term.

Well, thank you very much, Deputy Presiding Officer, and thank you to the Member for those comments and questions.

Byddaf yn ceisio ymateb i dri o'r cwestiynau mawrion a ofynnwyd. Cytunaf yn llwyr â'r hyn a ddywedodd Adam Price, sef ein bod yn ceisio cael cydbwysedd yn y Bil rhwng parhad uniongyrchol—gan fod yna system y mae pobl yn gyfarwydd iawn â hi, system a chanddi hefyd lawer o gydrannau trawsffiniol hefyd, ac roedd yr ymatebion i'r ymgynghoriad ynglŷn â'r Bil drafft gan ymarferwyr yn ddiamwys wrth ofyn i ni ddylunio system a fyddai’n gyfarwydd iddynt ar y diwrnod y caiff ei chyflwyno. Ond mae'n rhaid i ni fynd y tu hwnt i hynny, i lunio Bil a fydd yn caniatáu ar gyfer addasu’r polisi ar ôl ei gyflwyno. Dyna yw’r hyn yr ydym wedi ceisio ei wneud wrth lunio'r Bil. Bydd o ddiddordeb i'r Pwyllgor Cyllid, rwy'n siŵr, ond hefyd i'r pwyllgor materion cyfansoddiadol, i edrych ar y ffordd y mae rhai o'r pwerau hynny sy'n llunio rheoliadau wedi'u cynnwys yn y Bil, a cheisio gwneud yn siŵr y byddai'n rhaid cael trafodaeth gadarnhaol ar lawr y Cynulliad hwn, pryd bynnag y bydd pŵer sy'n llunio rheoliadau yn cael ei ddefnyddio mewn ffordd a allai newid y baich treth ar unigolion.

Ond, ar yr un pryd, rwy'n credu ei fod yn creu fframwaith hyblyg a fydd yn golygu fod y Bil, os caiff ei wneud yn Ddeddf, wedi’i lunio mewn ffordd a fydd yn caniatáu i syniadau newydd a phosibiliadau newydd gael eu cynnig.

Unwaith eto, mae'r Aelod yn llygad ei le wrth ddweud fod gan y Bil gysylltiad uniongyrchol â'r trafodaethau ar y fframwaith cyllidol, gan y byddai'n ffurfio rhan o'r mecanwaith addasu grantiau bloc yr ydym yn ei drafod â'r Trysorlys. Rwy'n hapus iawn i ddweud wrth yr Aelodau fy mod wedi cyfarfod â Phrif Ysgrifennydd y Trysorlys unwaith yn barod, yn gynharach yn yr haf, ac rwyf i fod i gwrdd ag ef eto cyn diwedd y mis hwn. Y cyfarfod hwnnw fydd dechrau'r trafodaethau manwl ynglŷn â'r fframwaith cyllidol a'r mecanweithiau addasu grantiau bloc a fydd yn angenrheidiol ar gyfer y Bil hwn ac yn fwy cyffredinol o ran y ffordd y caiff trethi datganoledig eu trafod ar gyfer y dyfodol, a'r modd y byddant yn rhyngweithio â'r grantiau bloc. Rwy'n edrych ymlaen at gwrdd ag aelodau Canolfan Llywodraethiant Cymru yfory—awduron yr adroddiad—i glywed yn uniongyrchol ganddyn nhw am rai o'r syniadau hynny ynglŷn â sut y gallem ni gael cymharydd a fyddai'n diystyru Llundain a de-ddwyrain Lloegr, a'i effaith niweidiol ar gymariaethau â gweddill y Deyrnas Unedig.

Yn olaf, ymlaen â ni i’r tir peryglus y cefais fy ngwahodd i’w droedio yn y cwestiwn olaf—dyna yw natur y pwerau a ddarparwyd i'r Cynulliad hwn gan Ddeddf Llywodraeth Cymru 2014, sef fod gennym y pwerau i newid treth dir y dreth stamp. Mae gennym hawl i wneud hynny ar unwaith a dyna beth y mae'r Bil hwn felly yn bwriadu ei wneud. A yw hynny'n golygu y dylem ni osgoi cael dadl ynghylch cwestiynau mawrion am y gwahanol ffyrdd o fynd i'r afael â sut yr ydym yn codi refeniw, beth a ddylai gael ei drethu, sut y mae'r trethi hyn yn rhyngweithio â’i gilydd? Nid wyf yn credu y dylem ni osgoi hynny o gwbl. Rwy'n credu efallai’n wir mai'r tymor Cynulliad hwn yw'r un priodol i edrych ar y cwestiynau hynny, nid yn haniaethol, ond edrych ar sut y byddai'r syniadau hynny, mewn modd ymarferol, yn cael eu cymhwyso pe baent yn cael eu gweithredu yng Nghymru, ac yna rhoi caniatâd i'r rhai hynny sydd â'r cyfrifoldeb i wneud penderfyniadau gwybodus amdanynt.

I very much welcome the statement by the Cabinet Secretary for Finance and Local Government on the land transaction tax. We know, on the land transaction tax, it’s a volatile and cyclical tax. We also know that it fell by £110 million between 2007-08 and 2009-10. We also know that the rate of increasing revenue in the south east, especially London, is greater than in the rest of the United Kingdom. We also know that the increase in London is at least partly due to overseas purchases—London is an international city. With the pound having fallen significantly in value against both the euro and the dollar, property prices in those currencies have also dropped considerably.

Can I just say, the Bill does mark a significant step in tax devolution? I think that’s something we need to really take account of. I very much welcome the introduction of a general anti-avoidance rule. In the last Assembly, some of us who were on the Finance Committee kept on talking about the need for a general anti-avoidance rule and I’m very pleased to see that having happened.

I’ve really got sort of two questions. One is about border properties. It says in the Bill:

‘Accordingly, the Welsh transaction is to be treated as a land transaction within the meaning of this Act (being the acquisition of a chargeable interest relating to the land in Wales).’

If there’s land in Wales and England, if the rate is the same in England and Wales, will the same amount be collected post the bringing in of this Act, and then split between England and Wales as it is now? I.e., will there be an opportunity for people to reduce the amount of tax they pay by having a value in England and a value in Wales that takes them below a threshold, which would reduce the amount of money they had to pay?

The second point is really—or the next two points, really, are following on from Adam Price; I wish I’d spoken before him, really. The first one is the no-detriment rule: is that going to be applied? If we’re going to see London and the south east, especially London, increasing in value—and there are houses in London for £50 million and £60 million; I’ve got streets in my constituency for that—I think you really have got that situation, in terms of the value that exists, that we are going to lose out over a period of time unless no-detriment is brought in. That either means, as Adam Price just said, excluding London and the south east and comparing us with comparable parts of England, or thinking of some other means of doing it so that we don’t end up losing out for the Welsh budget.

The third point—and I’m going to be even naughtier than Adam Price in trying to tempt you, Minister—is: is it now the time to start debating the relevance of a land value tax, as opposed to these property taxes, where people are taxed on the value of their land? I know that we’ve talked about it previously, before you had the current role you’ve got. Is now a time when at least it’s ready to start a debate on that subject?

I thank Mike Hedges for all those questions. I’m grateful for what he said about the general anti-avoidance rule, and those who will be looking at the Bill closely will see that we have adopted the Scottish test for the GAAR, which is that tax arrangements that are artificial will be captured by the GAAR, whereas, in the stamp duty land tax, they have to be abusive before the GAAR applies. So, we have lowered the threshold for when the general anti-avoidance rule will come into play.

The issue of border properties, I’m sure, will be one that the committee will want to pursue during scrutiny. We have worked very closely with the land value authority. We think there are about 450 properties—we can practically name them—and about 30 or so of those change hands in any one year. The extent to which a property falls within the new regime in Wales and the regime that will pertain in England will depend upon the extent to which the property is in one nation or another. So, if a quarter of the land lies in Wales, then a quarter of its liability will be determined under our law, and if three quarters of it lies in England, then three quarters of it will be determined under the law that pertains in England. This is why we’re glad that it’s only 30 properties this applies to, and lots of them, actually, don’t have a quarter and three quarters; they are essentially in one country and have a marginal bit of land that’s on the other side of the border.

The no-detriment principle is absolutely important in relation to the block grant adjustment. What is the block grant adjustment there for? It’s to reflect the fact that the UK Government will no longer receive revenues from taxpayers in Wales for which the tax has been devolved. We therefore need to make sure that if this Assembly makes decisions that mean that we are able to grow taxes then we should get the benefit; if we make decisions that are in the opposite direction, we have to be clear that we will face the consequences of those. But comparators therefore have to be fair ones, and that is the point that the Wales Governance Centre was making about the London effect.

Finally, in relation to land value taxation, well, personally, I’ve always seen attractions in that. What I want us to do, if we can, in this Assembly term is to move on from relatively theoretical rehearsals of the merits and demerits of different ways of organising taxation. There’s a very good report, published by the Scottish Government in December last year, jointly between the Convention of Scottish Local Authorities and the Scottish Government, that does exactly that: it rehearses the theoretical advantages of LVT, of a local income tax, of a reformed council tax, for example. I don’t think we need to go over that ground again. We know now what the basic pluses and minuses are theoretically. We need to do a bit of applied work to see, as I said to Adam, how, if we were to adopt any of those ways forward in Wales, what that would actually mean for applying taxes in Wales. Then we will be in a better position to see which of these models might be preferable for us.

Thank you, Cabinet Secretary, for your statement. You’ll be pleased to know that I am going to ask you about the land transaction tax and not about an array of hypothetical other taxation, be it the land tax or wealth tax or whatever. I think we’ve got enough on our plate dealing with this piece of legislation. You mentioned that this was a historic moment: the first Welsh tax in several hundred—I think it was 800 years. I felt like it took me 800 years to read the document. Actually, it’s quite a hefty document here, Cabinet Secretary, and there is a lot in there for us to consider before this finally does become the model of land transaction tax that is implemented across Wales. Whilst I acknowledge the more radical direction that Adam Price and Plaid Cymru put out earlier, I’m pleased that you’ve adopted the previous finance Minister’s maxim of keeping things the same as across the border and only deviating where absolutely necessary. Certainly, in the first instance, in the first few years of the operation of this tax, I think that’s a sensible move.

You mention no change for change’s sake. I could say that’s a good Conservative approach, Cabinet Secretary, but that would probably be antagonistic, so I’ll leave it at that. You mentioned consistency—and you were asked by both Mike Hedges and Adam Price about consistency—I’m sure you recognise it’s easy to talk about consistency, but can I ask you how are you ensuring that this consistency is taking place and will take place in practice? Is it on the one hand simply a case of copying English law where appropriate, or listening to experts in the field who may have their own issues with the law across the border and areas of where they think it can be better here and where, indeed, it might be worse across the border? How are you balancing that consistency? And—you have touched on this—how are you engaging stakeholders in an ongoing process as the tax is developed and, indeed, as it beds in?

We know that there have been concerns and anxieties in the tax world about the situation of having a different tax regime here. Land transaction tax, as you said, is particularly vulnerable to this criticism because of the way that people buy and sell houses along the border. I appreciate there may only be a few properties where the land is across the border, but there are many, many properties within close proximity of the border that will come into the decision-making process as people decide whether they’re going to be buying houses here or in England. So, how are you proposing to deal with those concerns of tax experts? There will need to be an understanding of the differences; how you are promoting this understanding? I believe from my meeting with you last week that tax experts and stakeholders who have seen the legislation already have been reassured to a certain extent, and I think that’s down in no small part to a lot of the hard work that has gone in from your staff, actually, in trying to make sure that, in the first instance, this is as workable as possible. How are you going to keep them reassured over the months and years to come so that they don’t lose confidence in the process?

Over the summer, we’ve seen changes to UK stamp duty in terms of tackling tax avoidance. You mentioned the GAAR. As we discussed in our meeting last week, in England, tax advisers are now set to be liable for avoidance as well, not just the people whose tax forms they are. It will be advisers and people filling out their tax form and paying the tax in the first instance. I think it’s important that the new Welsh legislation incorporates these changes. How is this now going to be achieved? I don’t think it’s in that document at the moment. How are you ensuring that the legislation is, firstly, futureproofed and, secondly, regularly updated with any changes that the Assembly deems necessary over the years to come? I don’t think this is going to be an automatic updating any more as this tax and other taxes in Wales diverge from English taxes, so it’s important that we know this legislation and other tax legislation will be futureproofed.

Two final things, Cabinet Secretary: do you agree with me that the aim here, the holy grail if you like, should not be just to replace the UK tax when it is switched off with a satisfactory land transaction tax, but to prove the critics wrong and to do something better here in Wales, something that taxpayers in Wales will actually look to as an improvement on what has gone before? It’s easier said than done, I know—and let’s face it, paying taxation will not be anyone’s first choice, but it is a fact of life, and it’s something that I’m sure that you and your Government would want to make as easy as possible for people here in Wales.

Very finally, Deputy Presiding Officer, on the issue that was raised by Plaid Cymru and Mike Hedges on the fiscal framework, yes, I think that you cannot see this land transaction tax and the fiscal framework in separation. Whilst it’s true and inevitable and we all understand that there will, of course, be a reduction in the block grant to Wales when these taxes come into force, what we don’t want to see—any of us across this Chamber—is an unfair reduction in the block grant. In the first instance, that might not happen, but as the years go by and you have issues such as inflation and population change, there is a danger that, unless the fiscal framework is operating properly, Wales could be short-changed in the future. What discussions did you have with the Treasury, and have you had with the Chief Secretary to the Treasury, to make sure that they fully understand and appreciate our concerns here, to make sure that when these taxes do come into effect, they work as best as they possibly can?

Thank you, Dirprwy Lywydd. I’m always glad to hear Nick Ramsay say those things about the fiscal framework; I quoted him in my meeting with the Chief Secretary to the Treasury to let the Chief Secretary to the Treasury know what pressure I was under from the Conservative benches here in the Assembly to make sure that the fiscal framework was properly negotiated from the Welsh perspective. So, I’ll be glad to be able to tell him that those interests continue very firmly.

Working backwards, in a way, through the questions, absolutely it is our ambition not simply to replace but to improve the way that this particular form of taxation is operated here in Wales. Are we simply copying English law? No. One of the features of stamp duty land tax is the way, as legislation tends to do, it has grown up over the years with bits being added on here and bits being voted on in another Bill so that it’s actually quite hard to find everything you need to know. So, we are in a lucky position of being able to consolidate all those changes into one place, making the law more accessible and understandable. And we have certainly taken a great deal of learning from experts here in Wales—experts in taxation, but also experts in the field of land transaction—and I think the Bill shows the benefit of the advice which they have very freely given. We certainly want to, in the way that Nick Ramsay asked, go on benefiting from that during the progress of the Bill. The advisory structures that my predecessor, Jane Hutt, largely set in place are to continue during the whole of the Bill’s passage through this National Assembly.

Nick Ramsay’s absolutely right to say that while there are not that many properties that are actually straddling the border, there are far more properties that are transacted along the border, and therefore we have to make sure that practitioners on the other side of the border are well informed about the rules that they will be operating under if they are working in the Welsh context. A lot of work has gone on already within the professions using professional networks and professional publications, and so on, to promote understanding, and we will be doing everything that we can to make sure that that information is readily available to people who need to prepare themselves to provide good advice.

Publishing a draft version of the Bill just before the recess, with the agreement of the office of the Presiding Officer, I think has been successful in allowing those who will have to do the practical business under this new rule book—in giving them an assurance that, to begin with, we aim for consistency and then we allow for divergence as things develop.

Finally, in relation to penalties and tax avoidance, Nick Ramsay points to a consultation document that the Treasury published during August in which it plans a new deterrent regime for those who provide advice which is clearly designed to avoid taxes that are legitimately there to be collected. That consultation ends on 12 October, so we don’t actually know for sure what it is that the Treasury will do. There’s been some quite hostile response to some of the ideas that the Treasury has floated. I’m very keen to keep a close eye on all of that and to see how much we might want to replicate, as part of our Bill, in terms of the deterrent measures that are being considered in London.

Finally, Mark Reckless.

Thank you. My party accepted the St David’s Day agreement and said we would work with that, I think largely because we wanted to focus on delivering better public services in Wales, rather than continued constitutional navel-gazing. We do not accept the change to devolve income tax powers without a referendum, which is a departure from that St David’s Day agreement, but we note the inclusion of these two taxes within that agreement, and therefore, we engage constructively with that.

I wonder, though, could the Cabinet Secretary explain the rationale as to why it was these two taxes—the stamp duty or the land transaction tax and the landfill tax—that were chosen and consensus met on those, for the benefit of new Members or those who didn’t participate in the St David’s Day agreement?

Second, we see, I think, on the Plaid benches perhaps some understandable celebration at a point of principle of the devolution of a Welsh tax, and while I look forward to sitting on the Finance Committee under Simon Thomas’s chairmanship, I don’t necessarily share that sense of celebration, but it would be churlish for us not to recognise the importance of this to some Members in this Siambr. However, would the Cabinet Secretary agree that these two taxes would be the first two of many to be devolved and does he see this tax as an opportunity to move to a Welsh tax regime separate from that of elsewhere in the United Kingdom for land and property generally, rather than just for this narrow tax?

He mentioned a focus on uniquely Welsh needs and priorities, and I, like Nick Ramsay, have enjoyed my summer reading; I understand that this is the longest law that the Welsh Assembly has, to date, considered. Certainly, from my reading of it, there seems to be rather more replication of UK legislation and codification—in some areas in a lot of technical detail—and rather less, at least as I’ve been able to discern to date, of new departures aimed at uniquely Welsh needs and priorities. I just wonder whether he could give some examples of those uniquely Welsh needs and priorities that he believes this legislation will address.

Thirdly, as a lawyer, perhaps if I could just warn that, on the desire and ambition to extend, simplify and strengthen the existing system, he may find there is an element of tension between the extending and strengthening and the simplifying. Even where codification does appear to simplify existing or previous practice, it often will lead—and he may find this also with the general anti-avoidance rule, however simple it appears—to case law that develops and injects its own complexity in, perhaps, less predictable ways than would’ve been the case if the legislation were not changed. On the extent that there is some difference between the Welsh system—and I hear what he says about making it recognisable is the first priority—does he expect firms of solicitors on the English side of the border that might only occasionally, perhaps, conveyance a Welsh property—. Does he see many of those exiting the market for providing conveyancing services for Wales, and would he see that as a positive and more legal services being delivered at home in Wales, or a negative in reducing competition in the area?

Finally, the issue ably raised by Mike Hedges of the cross-border properties—I understand not large in number, but a point of some interest or principle to Members. Is it really sensible to have a regime where you have two taxes applying to the same property? Mike mentioned the potential for that to lead to a lower tax and perhaps a desire for people to build properties straddling the border, because with a progressive tax you split it into two and the overall amount paid may be lower. Is that really something that we want to lead to? The Cabinet Secretary then said, ‘Well, actually, with most of them, it’s only a small proportion that will go one side or the other’. In which case, doesn’t it follow—? Wouldn’t it be more sensible and easier for practitioners, as well as ourselves, if perhaps we said that whichever side of the border the larger part was on, the tax system of that there nation might take responsibility for the tax of that particular transaction?

Turning to the last question first: the rules for how cross-border properties are to be treated in devising the new tax strategy are set out in the 2014 Act. They’re not something that we have the freedom to manoeuvre over, even when there are sensible suggestions about how it might be done differently. We have a rulebook; we are trying to design the best system we can within it. Do I expect that practitioners on the other side of the border will do less business in Wales as a result of the Bill? That’s not the intention of the Bill, but I can see how, in the way we’ve described the future of the Bill, staying relatively close to known ways of doing things to begin with—. Greater divergence—not simply on our side, but law in relation to stamp duty land tax has changed relatively rapidly on an England and Wales basis, so there will be changes the other side of the border as well that will emphasise divergence over time, and that may change the way that people carry out their business.

I was interested in what the Member had to say about tensions between different ambitions for simplicity and clarity and so on. If there are tensions that we haven’t seen for ourselves, or that will come to greater prominence during the scrutiny process—I think that will be very useful, and I will certainly attend very careful to any examples that emerge. The Member asked about where new departures are to be found in the Bill, and even though, as I say, our ambition is to allow for a smooth transition, there are examples throughout the Bill of where we have adjusted arrangements to take account of Welsh needs and priorities. In relation to leases, for example, which have always been a topic of interest in the Welsh context, you will see that the rent element of residential leases are not proposed to be taxed under LTT, although they are under SDLT. We’re making improvements in the rules for leases that continue after a fixed term and indefinite-term leases, which are important in a Welsh context, and also changes to how the rules operate when a new lease is granted, but the date on which it is to commence is backdated. All of these things are intended to be consistent with our ambitions for greater simplicity, consistency and fairness, but they do arise directly from our experience of leases and leaseholding here in Wales.

Where did they all come from, these two particular taxes? Well, they come from the Silk commission, and from the work that the commission did and its very thorough examination of all the different possibilities of taxes that could be devolved to Wales. The principle that we’re establishing, Dirprwy Lywydd, just to end with, is of course the principle that we are able to take responsibility for taxes that affect people in Wales directly through the National Assembly. But it’s a wider principle than that, and it’s why we are right to focus on it and to celebrate it to an extent. And that’s the principle—that a body that expends revenue should take some responsibility for raising the revenue that it expends. We’ve never been in that position in the National Assembly for Wales to date. We will be in that position once this law and the landfill disposals tax come into being, and that’s the journey that we’re embarking on this afternoon.

Thank you very much, Cabinet Secretary.