We’ve spent much time considering how our law-making powers can reshape our society and now we can consider how our fiscal powers can contribute too. This is exactly the kind of ambitious and open debate that this place was created for—an opportunity for us to challenge the status quo and truly set Wales apart. But, as well as considering what we could do with new taxes, we should also be thinking about how we can harness existing tax-varying powers too. We should do this within an agreed, coherent set of principles, against which we can test our revenue-making approach. So, today I would like to suggest three such principles for us to consider—transparency, fairness and resilience—with some specific examples of steps we could take to ensure that our tax system meets them.

First, to transparency. I am supportive of many of the ideas that have been spoken about today, including the sugar tax, the sunbed tax and the take-away packaging tax, suggested by the Bevan Commission: taxes that try to nudge behaviours. But, I am also a strong believer that revenues from taxes aimed at achieving behaviour change should be used to incentivise the positive behaviour we are trying to encourage. So, petrol duty, for example, should be invested in sustainable forms of transport, to give people a viable alternative to driving. Similarly, the sugar tax could be used to subsidise the cost of locally grown decent food, and revenue raised through the take-away packaging tax ploughed into community regeneration schemes. In this way, we can ensure that the pockets hit hardest by the taxes also benefit the most. If we sign up to any of these taxes, we need to have a clear idea of the behaviour change we are trying to incentivise. We need to work with communities across Wales to decide how best to do this—democratising our tax system and making our aims transparent in the process. But, before we become too distracted by the shiny new taxes we could bring in, I think we should examine the taxes already under our control and exercising duties coming our way.

This leads me to the second principle I would like to speak to: that of fairness. In a few months, we will adopt responsibility for land transaction tax and landfill disposals tax. In 2019, we will have the additional income tax powers. Clearly, these are important steps in our evolution into a proper Parliament for Wales. But, we should not lose focus on powers already under our control, namely business rates and council tax. We have done little to differentiate ourselves from how these taxes operate in England. Business rates could be a powerful tool in addressing concerns on town-centre regeneration. Yet, in Llanelli town centre, for example, some shops have seen their business rates skyrocket. Shops around Station Road, a deprived part of town, have seen the average value per square metre rise from £80 to £200, while some shop rates in Parc Trostre out-of-town retail park have fallen, and whilst purpose-built town centre car parks have to pay business rates, Trostre’s vast car park is free of such charges, and this works directly against two policies we want to encourage: the promotion of sustainable transport and town-centre regeneration. Imagine what we could achieve if we restructured rates to more accurately reflect the challenges our town centres are facing, and if we re-examined the case for charging rates on out-of-town car parking, just as they’re taxed in town centres, whilst ring-fencing any revenues raised for local regeneration projects.

Now, there are similar issues with council tax, which remains one of the most regressive taxes there is, whilst also being one of the taxes most difficult to dodge. In his Senedd paper written for the IWA on the issue, Gerry Holtham pointed out that, for homes worth less than £44,000, council tax amounted to almost 2 per cent of the property value, whilst for homes worth over £424,000, that amount dropped to 0.5 per cent. Now, there are clear opportunities for making the council tax fairer. Adding additional council tax bands, which I notice Plaid Cymru included in their manifesto, would shift—[Interruption.]

To be fair, I was involved in drafting the paper some time before your manifesto was written, so give me some credit.

They would shift a greater burden of contribution on to people with large, expensive houses—money that could be used to boost social care budgets or to remove people altogether with less money or smaller homes from council tax. But, as Gerry Holtham has pointed out in the celebrated commission that bears his name, there aren't many wealthy people in Wales, and the few there are are highly mobile. So, if we put—[Interruption.]

I'm sorry, Nick; I'd like to, but time’s against me.

If we put extra burdens on the richest, they could easily hop across the long, porous border with England. So, if we are to increase their property taxes, we should look to balance that out by reducing their income tax with new powers—that's the bit Plaid Cymru didn't mention. It would smooth the move to a more progressive tax system that focuses on land and property and may well have the effect of attracting into Wales more people in the high income bracket to shore up our weak tax base.

And that brings me on to my final principle, Llywydd, if I might: the need for our tax system to be resilient. Over the next 20 years, we're estimating that 700,000 jobs in Wales are at risk from automation, and the implications of this from a tax revenue and social security perspective are clear: tax receipts will drop at a time when some people will need help most. We must ensure the safety net is fit for purpose, and we need a national debate about how such proposals as universal basic income in Wales would work. Clearly, much of this is some way off. We have hurdles to overcome. We may need a profound rethink of our taxation system. But it's important we start the debate now, so we're prepared for the challenge to come. Diolch.