3. 3. Statement: The Tax Policy Framework

Part of the debate – in the Senedd at 2:48 pm on 13 June 2017.

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Photo of Nick Ramsay Nick Ramsay Conservative 2:48, 13 June 2017

Thank you, Deputy Presiding Officer. I thank the Cabinet Secretary for bringing forward this statement today and for advance sight, indeed, of the tax policy framework document. Rest assured I will try to steer clear of any dog-eat-dog, neo-liberal comments—not usually my style, but I suppose there’s always a first time—but, in the case of this document, there was a lot here that we can agree with and, of course, has to happen as taxes are switched off at the UK level.

Can I also compliment the Cabinet Secretary or whoever drafted the foreword of this document? [Interruption.] Maybe it was the Cabinet Secretary. The opening is worthy of Shakespeare, I think; it does read like a Shakespearian sonnet. Someone clearly has a great love of devolved taxes, and it’s good to know that devolved fiscal policy is not always as dry as it sometimes seems that it has to be. This reads very well, anyway—the opening foreword.

The April 2018 date for the devolution of taxes that you mentioned—for the initial tranche, at any rate—is fast approaching, and clearly much work needs to be done in advance of this. There is now, as you say, a growing debate around the use of tax policy to boost the economy, and we welcome and wish to be part of that debate. We clearly are on a steep learning curve and need to rapidly develop, I think we’d all agree, our capacity in relation to fiscal expertise, particularly in the area of forecasting, not just in the mechanical workings of institutions like the Welsh Revenue Authority.

Cabinet Secretary, the tax policy framework repeatedly states that there should be no change for change’s sake—an adage that you have pursued and that your predecessor, Jane Hutt, 0pursued, and that Welsh taxes sit within a wider UK context. That’s something I would completely agree with. I think it’s good that we’re starting out with that maxim.

In terms of it sitting within the wider UK and international context, what mechanisms are in place to see that there is a close dialogue with the UK Government when it comes to making tax policy decisions? Clearly, at the start of this process and with the establishment of the WRA, there have had to be UK-wide discussions. Beyond that, it will be up to us to set our own devolved taxes, but I think it is helpful that we do see those in the wider UK context. And, clearly, there aren’t just effects on us of UK policy, but there will be a certain degree of effect on the policy decisions that we take here in terms of tax across the rest of the UK as well, particularly when you consider the porous border and the number of people who live near the Welsh border in Wales—50 per cent of the population within 30 miles.

I’m pleased that you’re honouring your commitment to bring forward details of rates and bands. I believe that that was the commitment you gave to the Finance Committee, with many of us, including me, and I remember Mark Reckless making the point that we would like to have seen the rates and bands on the face of the Bill upfront. You made your arguments for not doing that, and I remember you saying that, as a compromise, you would bring forward further details of the rates at an appropriate time. So, I’m pleased to see that coming forward and we will look at those with interest.

The policy framework refers to new taxes several times. And, of course, the new fiscal regime does allow for the Welsh Government to introduce new taxes. I think it was when we had the Senedd at Newport and you came to an evidence session there, I seem to remember you saying that you thought it would be interesting to develop or look at developing some new taxes, or one new tax, I think you said, as a trial to see how that process would work, to test that process. Have you had any further thoughts on that, because, clearly, if, on the one hand—I’m being cynical for a moment—you are thinking of keeping the existing tax take with the existing taxes like stamp duty and landfill, et cetera, and keeping those relatively similar to where they are at the moment, if you bring in a new tax, then that is a way of surreptitiously increasing a tax take. So, I’d be interested to know if you had any further thoughts on developing new taxes.

Can I ask you about the reform of council tax, which you do mention briefly in the framework document? Is this a precursor to a move or to a debate about potentially replacing that with a land value tax? There has been a lot of discussion between Assembly Members and also within Wales, outside within academia, about the relative merits of a land value tax. I know it operates in other parts of the world. Clearly a land value tax—I’m not going to enter the discussion about it now—has benefits for some, but, in rural areas, where there is more land ownership, then that could cause problems. So, I think if we are going down the line of looking at a land value tax, the sooner we initiate that discussion so that we can all have an input into that, the better.

On the issue of income tax in general, obviously it’s different to the other two taxes—and I’ll finish with this, Deputy Presiding Officer—in that I believe that the responsibility for raising this remains with HMRC; it’s not something that’s going to be devolved here. So, how are you working to strengthen relations with HMRC in this respect to make sure that this process does run as smoothly as possible? But, thank you for bringing forward this framework today. I look forward to its development with interest.