3. 3. Statement: The Tax Policy Framework

Part of the debate – in the Senedd at 2:54 pm on 13 June 2017.

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Photo of Mark Drakeford Mark Drakeford Labour 2:54, 13 June 2017

Diolch, Dirprwy Lywydd. I thank Nick Ramsay for his broad welcome of the publication of the framework and its work programme. I did have a hand in the writing of the foreword to it. I think Mario Cuomo said that politicians campaign in poetry but govern in prose, and, generally, I think the job of a working politician is closer to limericks than sonnets. But I’m glad that he enjoyed reading it.

Can I say that I think he very accurately summarised some of the key debates that lie behind the framework and the advice that we have had from stakeholders about continuity, in the earliest days of tax devolution, with a possibility of greater differentiation in the future and particular advice to us about the porous nature of the border and being attentive to the way in which decisions about devolved taxes made in Wales would have an impact upon cross-border activity.

Nick Ramsay asked me a series of specific questions, Dirprwy Lywydd, which I will try and answer now. In relation to how we will continue to have a close dialogue with other component parts of the United Kingdom, I look forward to the continuation of the finance quadrilateral meetings involving the finance Ministers of the north of Ireland, of Scotland and the Chief Secretary to the Treasury. In a spirit of cross-party co-operation, let me put on record my appreciation of the work of David Gauke when he was Chief Secretary to the Treasury. He’s now been promoted, I would guess, to a more substantive Cabinet portfolio, but I always found him someone with whom it was possible to do business and to have proper conversations, even when we didn’t agree, and I look forward now to re-establishing that relationship with his successor.

Can I confirm this afternoon, Dirprwy Lywydd, that I do intend to bring forward a statement in relation to rates and bands by 1 October as I agreed with the Finance Committee? As to new taxes, I think, Dirprwy Lywydd, it would be accurate to say that the new settlement allows the Welsh Government the potential to propose new taxes rather than to introduce new Welsh taxes. There are a series of hurdles set out in the command paper that led to the Wales Act 2014 that we would have to meet, were a new tax successfully to be proposed for Wales. I am very keen, as I said in Newport, to test the machinery that has now been established. And, as I said in my statement, a debate has been agreed in Government time before the summer recess, and I hope that the nature of that debate will be genuinely open. It’s not a debate on a series of propositions the Government intends to bring forward for people to endorse or not. It’s a debate in which I hope we will collectively pool all the ideas that we might be able to generate, all the considerations that we think we need to work through, and that it will be a debate in which, across the Chamber, we share the best ideas we have in order to allow us to test that machinery in the most successful way.

Nick Ramsay asked about reform of council tax and whether it is directly linked to the longer term possibilities of replacing council tax. The answer, I think, to that is probably that they’re not directly linked in that way. I do hope to make some proposals for the reform of council tax as it operates in the here and now to make it fairer and make it more efficiently administered. At the same time, the work programme, as Members will have seen, commits us to work to look at, in an applied way, how alternatives to the council tax, including LVT, might impact, were they to be introduced, in Welsh circumstances. I think that’s a very important piece of work, and it will allow the Assembly in the future to make an informed decision as to whether or not there is a better way of organising local taxation arrangements, because we will have moved on in this Assembly term from a rehearsal of the theoretical merits of different models of local taxation to an applied piece of work that looks at what we would actually have to do and what the real-world impact of a shift might be.

Finally, to confirm what Nick Ramsay said, administration of income tax, post the partial devolution of income tax, will remain with HMRC, not with the Welsh Revenue Authority, but a joint project board has been established and has met, between the HMRC, between the Welsh Government, involving the WRA as well. HMRC will draw on its experience of partial devolution of income tax in Scotland to make sure that it is in the best position it can be to take on these new-formed responsibilities for Wales.