The following amendments have been selected: amendment 1 in the name of Rhun ap Iorwerth, amendment 2 in the name of Paul Davies, and amendment 3 in the name of Julie James. If amendment 1 is agreed, amendments 2 and 3 will be deselected. If amendment 2 is agreed, amendment 3 will be deselected.

We move on to item 7, which is the United Kingdom Independence Party debate on new Welsh taxes, and I call on Neil Hamilton to move the motion—Neil.

Motion NDM6566 Neil Hamilton

To propose that the National Assembly for Wales:

1. Believes that:

a) introducing new Welsh taxes without the consent of the electorate, and treating Wales as an experimental tax laboratory, will damage the reputation of both the Welsh Government and National Assembly for Wales; and

b) UK and Welsh taxes are high enough already, stifling entrepreneurship and growth and squeezing the budget of those on low incomes.

2. Calls on the Welsh Government not to prioritise research into new Welsh taxes but, instead, to pursue policies to improve economic growth and the creation of well paid jobs, which neither place extra tax burdens on individuals and businesses, nor punish individuals for their lifestyle choices.

Motion moved.

Thank you, Deputy Presiding Officer. I beg to move the motion standing in my name on the agenda. It has, as usual, been attempted to be amended by other parties by deleting our motion in its entirety and substituting their own. But there are parts of the amendments that I agree with.

I certainly agree with Plaid Cymru on tax devolution to Wales, and it provides an opportunity to enhance the accountability of the Welsh Government. That's an extremely good thing that they should be held responsible for raising the money that they spend so enthusiastically. I agree that there should be consultation on any innovative taxes that the Welsh Government might introduce, and I certainly support Plaid Cymru and indeed the Government in their desire to devolve air passenger duty to Wales and indeed corporation tax to Wales. I've strongly supported this because that would enable us to abolish air passenger duty, where I would be at one with the Welsh Government, and to reduce corporation tax to, as I've said many times before, compensate for some of the historical complications and difficulties that we face in Wales.

As regards the Conservative amendments, again, I accept most of those, though I'm rather surprised to see the Conservative Party believing that a comprehensive tax base encourages greater prosperity. When I was in the Conservative Party, I thought we were the low tax party that wanted to reduce the impact of taxation upon the economy because of its effect upon incentives and so on, but times change and sometimes parties change with them, evidently. So I—

That's a very mischievous comment. I think you're misunderstanding what we meant by 'comprehensive'. We didn't mean a higher tax base, we meant a comprehensive tax base that takes into account all factors and provides a competitive environment for the economy. That's what we meant.

Well, I can't be responsible for the obscurity of the Conservatives' language, but I am glad to have that illumination.

In the Finance Committee a few weeks ago, when the finance Secretary gave evidence to us, I was intrigued to hear Eluned Morgan in ecstatic tones say that the most exciting part of his announcement about devolved taxes at the beginning of October was that we've got a new tax. Now, there are many things I get excited about, but new taxes are not one of them, and I suppose it shows the difference in mindset between a socialist on the one hand and somebody with libertarian instincts like me on the other.

So, I see taxation, of course, as inevitable in a modern society to pay for the things that are provided through the Government, but nevertheless we should always, I think, seek to create a tax system that does not get in the way of wealth creation, and, I don't believe, as our motion says in the final paragraph, that we should place extra tax burdens on individuals and businesses or punish individuals for their lifestyle choices.

Low-tax economies generally tend to be the ones that are most successful. Now, the finance Secretary has criticised me on more than one occasion for mentioning Singapore. The last time I raised the position of Singapore, he referred to my dystopian vision of Britain as a Singapore-style economy. Well, it would be a very good thing if we did replicate Singapore's success in the modern world. In 1965, when Singapore became independent, their average income was $500 a year; now it's $55,000 a year—the average income in Singapore. That has come about because of the pro-business culture of the Singaporean Government in the last half century. 

In the period from 1965 to 2015, there was a 3,700 per cent increase in the average income of people in Singapore, compared with only 300 per cent in the United States. And if we just take the 15 years from 2000 to 2015, there was a 35 per cent increase in the standard of living in Singapore, compared with only 8 per cent in the United States. They do seem to understand how to create wealth and prosperity, so perhaps we can learn something from them. Ninety per cent of Singaporeans are owner-occupiers, and it's not because they don't have good education or good health services either; there are many studies that show that Singapore has some of the highest standards in the world.

Now, the Welsh Government is in the process of using its freedom to set new taxes and to vary taxes, I think, to go in entirely the wrong direction. The possibility of introducing a tourist tax, I think, has been roundly condemned by anybody who has anything to do with the tourist industry. It is of massive importance to the Welsh economy, particularly in Mid and West Wales, which I represent. Wales, at the moment, has 5 per cent of the UK population, but only 3 per cent of the UK's tourists and only 2 per cent of tourist spend. It seems to me to be quite quixotic to be imposing taxes, or proposing the imposition of taxes upon tourists, particularly as the United Kingdom, in the World Economic Forum study of the taxes upon tourism around the world, is placed in position 135 out of 136 countries in terms of competitiveness. We should be doing all that we can to encourage, not discourage tourism into Wales and the United Kingdom generally.

Of course, the hospitality industry in Wales has roundly condemned this proposal. Anthony Rosser, who is the chairman of the British Hospitality Association in Wales, and manager of the Lake Vyrnwy hotel, says:

'We already have very real worries over the recent cauldron of costs that have boiled over in the last 18 months, including increases in business rates, wage increases, rising inflation and food and energy hikes. Increasing costs like this will, of course, be handing an unfair advantage to our competitors in England.'

So, my party will be roundly opposing any proposal to introduce a tourist tax if one is presented to us in due course.

The latest announcement is not a tax as such, but equivalent to a tax—the proposal to introduce minimum alcohol prices into Wales. This is supposedly to cure the problems of excessive alcohol drinking, but it can never do that, given the mess of alcohol duties and taxes generally throughout the United Kingdom. We have the highest alcohol taxes in Europe, overall—77 per cent of the price of a bottle of Scotch is accounted for by tax—[Interruption.] Yes.

So, you're saying that the cost of alcohol in this country is higher, due to taxation, than that in Scandinavia.

Well, I am saying that, actually. I'm saying that the proportion of the cost that consumers pay is higher in the United Kingdom than it is anywhere else in Europe. I can provide the figures for the honourable Member if he wishes, but with only three minutes to go, I don't think I have got time.

But we have the highest rate of beer duty in Europe, at 52.2p a pint. That's 13 times the duty in Germany or Spain. What is it about Britain or Wales that creates an alcohol problem? It certainly isn't the existence of cheap alcohol, so we must look elsewhere for the solution to the social problems that excessive drinking of alcohol by a small minority of irresponsible people brings about.

There is no logic whatever to the alcoholic duties in Britain, because alcohol duty per unit on beer is 8p, on strong beer, it's 18p, on cider, it's 8p. But strong cider is actually taxed at a lower rate than ordinary ciders, and strong sparkling cider is five times the rate of ordinary cider. Wine is taxed at 20p a unit, and sparkling wine at 25p a unit. So, there's no logic to the differences in the way alcohol is priced at all. Taxing stronger ales and beers through a minimum alcohol price is only likely to lead to a diversion from one type of alcohol to another, rather than to reduce the social problems that excessive drinking causes.

Also, there are other taxes that might be in prospect, like a sugar tax. Most of these taxes, of course, are going to bare most heavily upon those in society who are least able to cope with the extra tax burden. The poorest 10 per cent of people in the United Kingdom spend 20 per cent of their gross income on a combination of duties and value added tax. We have a highly regressive system of indirect taxation in this country. We should surely not be trying to make that worse than it is.

But there's a general principle here: the extent to which the state should be trying to influence people's behaviour in their lifestyle choices through the tax system. If there's a problem of public order that is created as a result of binge drinking on Saturday nights in city centres, then we can cope with that better by enforcing the law on public disorder. Years ago, the police used to arrest people for falling over in the street drunk and vomiting in gutters. Now, it's almost a form of popular entertainment to watch this happening in the city centre. So, it's not the price of alcohol that is the problem. If people go out to get hammered on a Saturday night, then they will do that anyway, regardless of the price, unless you're going to introduce really draconian increases in duties beyond what we have now.

So, this debate is called today as a kind of plea to move Wales in the direction of a low-tax economy that is going to maximise the potential for wealth creation in what is one of the poorest parts of western Europe. That's not an accolade that I want Wales to continue to have. We are now, as we know, the poorest part of the United Kingdom, amongst all the nations and regions of England. Twenty years ago, we were second from bottom, now we are bottom. Do we not want to do something about that? If we do have the opportunity to use income tax as a means of influencing the economy, surely we should seek to make Wales a kind of internal tax haven in the United Kingdom. That's not just for libertarian reasons of wanting people to keep in their own pockets as much as possible of the money that they themselves have earned. What I earn and what you earn and what the public at large earns does not belong to the state. So, I believe in, as Mr Gladstone used to put it, money fructifying in the pockets of the people. If we go back to Adam Smith and The Wealth of Nations—I'd like to end my speech with this reflection—where he says:

'It is the highest impertinence and presumption…in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense...They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.'

Thank you.

I have selected the three amendments to the motion. If amendment 1 is agreed, amendments 2 and 3 will be deselected. If amendment 2 is agreed, amendment 3 will be deselected.

I now call on Steffan Lewis to move amendment 1, tabled in the name of Rhun ap Iorwerth. 

Amendment 1 Rhun ap Iorwerth

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To propose that the National Assembly for Wales:

1. Believes that tax devolution to Wales provides an opportunity to enhance the accountability of Welsh Government to the people of Wales.

2. Welcomes the Welsh Government’s consultation on the possibility of introducing an innovative tax to support environmental and public health policy objectives.

3. Supports the introduction of a tax on disposable expanded polystyrene packaging.

4. Calls on the UK Government to devolve air passenger duty and corporation tax to Wales.

Amendment 1 moved.

Thank you, Deputy Presiding Officer. I welcome the opportunity to speak in this debate today. Obviously, I disagree with almost every word that the previous speaker said, but perhaps that won’t be a great deal of surprise. I move formally the amendment tabled in the name of Rhun ap Iorwerth.

The fact, of course, that we are talking about taxation policy in Wales is a huge step for us as a nation after 800 years without the right to raise taxes at all, and it won’t be news for the UKIP speaker, and I’m sure that he is not surprised, that almost every time now we put forward an amendment that deletes every word in the original motion. But that’s a reflection of the fact that we come from very different parts of the political spectrum and that we have different political ideals as well.

In the first instance, Plaid Cymru has been of the opinion that devolution of taxation strengthens democracy, because now the Welsh Government has to consider the fiscal results and economic results of its own policies and its own legislation, because it now has responsibility for some of the taxes that are placed on people in Wales. This is of benefit to the people of Wales and it places more responsibility and accountability on the Government here.

More generally, Plaid Cymru sees fiscal policy with regard to taxation as a way of creating a business environment that can lead to sustainable growth and a way of creating change in personal behaviour, which is beneficial for such things as health and in getting to grips with climate change, and importantly as a way of raising funds to invest in our people and in our public services. Of course, for me, as someone who wants to see Wales as an independent nation, it’s vital that we get to grips with the fiscal health of our own nation—not just because of constitutional aims, but to create vibrant and viable public services and communities.

In our amendment today, we welcome the Welsh Government’s consultation on the possibility of introducing new taxes that can support policies with regard to the environment, health and social issues. We of course particularly welcome the fact that the consultation considers the possibility of a tax on disposable plastics, which is a Plaid Cymru manifesto promise, and we hope that this will be introduced ultimately.

Of course, we’ve already put forward a tax on sugary drinks, which is something that, at the time, faced opposition from a number of parties in this Chamber, if I remember rightly, but which now is something that is welcomed and supported by everyone, as if they always had supported it. But, regardless, we do welcome the fact that there was support, ultimately.

We would reiterate our call for the devolution of corporation tax and air passenger duty. These are vital to the economic future of Wales, and there’s no reason for the Westminster Government to refuse to transfer them to Wales, especially as we consider the fiscal powers of the two other devolved nations. It’s not fair that the Westminster Government has the right to give a fiscal advantage in terms of taxes and the economy to nations as it sees fit. It’s up to the people and the Government of Wales and the Assembly of Wales to decide on the powers that we want in order to improve the lives of people in this country.

To conclude, Deputy Presiding Officer, I’d also like to take this opportunity to underline the importance of this institution and the Government ensuring that there is an awareness and an interest among the people of Wales in fiscal issues affecting the nation. Because, as we are now pursuing this idea of being a more normal nation that has taxation powers, we need to change how we undertake business here. We’ve seen today how much of a political occasion in terms of the news that the budget day for the United Kingdom is, with huge scrutiny and the public very aware of the importance of the statement made in Westminster. We need to ensure that there is a similar process here to raise awareness among the citizens of Wales about the decisions that are made—the fiscal decisions that are made—that will affect them, and also to convey the level of importance that exists in the national budget for Wales.

Thank you very much. I call on Nick Ramsay to move amendment 2, tabled in the name of Paul Davies.

Amendment 2 Paul Davies

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To propose that the National Assembly for Wales:

1. Welcomes the Wales Act 2014 and the Wales Act 2017, which devolve more powers to the National Assembly for Wales and provide greater accountability in relation to the day-to-day workings of the Welsh Government.

2. Believes that a comprehensive tax base encourages greater prosperity.

3. Regrets the Welsh Government’s proposal to introduce a tax on the tourism industry in Wales.

Amendment 2 moved.

Diolch. I'm pleased to move the amendment in the name of Paul Davies. This is one of those debates, I feel, where the amendments say it all. The Plaid, Welsh Conservative and Government amendments are all 'delete all', seeking to delete the motion and annihilate each other in the process. It's very generous of you, Neil Hamilton, to say that you would accept most of our amendment, given that it did delete most of your motion—but I take what you said in the spirit you meant it.

To be fair to the UKIP motion, it does make a couple of important points. Point 2 is right to say that the focus of Welsh Government should be on economic growth and the creation of well-paid jobs. That is what you would hope for from any Government. Yes, the Government should also support the most vulnerable in society, but you've got to have that initial wealth generation to share its dividends. And before Steffan Lewis jumps up and says I'm talking about trickle-down economics from the 1980s, I'm not; I'm simply talking about the importance of wealth generation to any economy. However, point 1 of the motion does get a little bogged down in rather emotive UKIP language, such as using

'Wales as an experimental tax laboratory'.

I must say, it does make the Welsh Government sound a little bit like Dr Bunsen and Beaker from The Muppet Show—Mark Isherwood liked that one. Maybe that was intentional from UKIP. Someone's clearly had a lot of fun up in your research department. Look, I do get where UKIP are coming from on part of this, but to be fair to the Welsh Government, the Wales Bill 2016 legislation does require the creation of new Welsh land transaction tax, stamp duty and land disposal tax by switching off the existing UK equivalents in Wales. Beyond that, the partial devolution of income tax in April 2019 is also a result of that UK legislation, although I appreciate it did feature as part of the Welsh Government negotiations with the Treasury in delivering the much-needed fiscal framework.

Okay, turning to the greatly debated new taxes: well, again, the Wales Bill legislation does allow for—the Welsh Government would say, 'even encourage'—the Government to look at the case for new taxes as a way of, yes, raising revenue, but also increasing accountability. Longer term Members of this place will have longer experience of this place as just a spending authority, which that new legislation has attempted to change. Where the Welsh Conservatives do diverge from the Welsh Government is the type of taxes that may or may not be considered as part of that process. Our amendment 2 cites the importance of a comprehensive tax base, which was raised earlier. By that, we mean one that is transparent, understandable and—most of all—competitive.

New Welsh taxes mustn't be something that is 'done' to people. I can see the Cabinet Secretary laughing—it might be over something else; I'm not sure. In fact, the Cabinet Secretary has said this, himself, in the past: rather, there should be a trust, a contract between the Government and the people when it comes to taxation. We shouldn't just be thinking, 'Right, how can we squeeze more money out of the tax base?' No matter how attractive that naturally is to any Government, particularly at a time when economic constraints are tight. No, we have to put the needs of the economy at the forefront—what will help the economy nurture business and create the right tax and employment environment.

On the issue of the so-called tourism tax, look, I don't intend to reopen this one today. I think comments by the Welsh Conservatives—and other parties, indeed—in previous debates make our position on that quite clear. What I would say is that the Welsh Government is completely within its rights to consider new taxes, but that process or mechanism must be one that recognises the balance between the potential harm and good to the economy, and making sure that the consideration itself of new taxation doesn't outweigh the benefits. We know how perceptions can grow, and people can be worried by even the suggestion of a change to an existing system. The Cabinet Secretary, and indeed his predecessor, said that there should be no change for change's sake. I thought that was a good maxim then, and I think it's a good maxim now. I know that it's one that the Cabinet Secretary agrees with. So, I think we should be sticking with that.

Can I say, finally, Deputy Presiding Officer, that there is no mention of borrowing in the motion? Clearly, one important aspect of tax devolution—at least it has been in debates in previous years in this Chamber—is to provide a revenue stream to support borrowing for capital projects—borrowing that has been a staple to local authorities for a long time, and to other bodies in Wales, but the Welsh Government, the Welsh Assembly has not been able to access. So, taxation devolution, if it does nothing else for good—and in the longer term we have to look at the effects that that taxation has—it does at least allow us to have a borrowing stream to invest in important capital projects. In summary, Deputy Presiding Officer, tax devolution, like it or not, is a fact of the new political landscape created by the Wales Bill. Like all tools, you can use them badly, or you can use the wrong tool for the wrong job, but that is an issue for all of us here.

On the issue, finally, of the consent of the electorate, well, of course, that doesn't just mean a referendum; that can also mean a general Assembly election, and I would hope that, moving forward, all parties here will be upfront about the tax proposals in their manifestos and in the run-up to future Assembly elections.

I do hope that the Cabinet Secretary will look again at the way that new legislation is implemented in Wales, to ensure that Wales does ultimately get a sustainable, competitive and popular—or as popular as possible—tax base in years to come.

Can I call on the Cabinet Secretary for Finance to move formally amendment 3, tabled in the name of Julie James?

Amendment 3 Julie James

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To propose that the National Assembly for Wales:

Notes it unanimously voted in favour of the decision to test the Wales Act mechanism to propose new taxes in a debate on 4 July 2017.

Amendment 3 moved.

Formally, Chair.

Thank you very much. Caroline Jones.

Diolch, Dirprwy Lywydd. Taxation, despite being one of the most divisive of topics, is one of the most important economic levers a Government can control. We all agree with the decision to give the Assembly powers over taxation. This has signalled the change from us being a spending institution to one now with responsibility for raising some of the funding we spend on public services.

UKIP believes in a low-tax economy. We would like to see lower taxes on business in order to attract large employers to Wales—a reduction perhaps in corporation tax. Unfortunately, membership of the single market prohibits this. The EU is currently taking action against Ireland for their deal with Apple, and Luxembourg for their deal with Amazon. Following Brexit, we may be able to incentivise Apple or Amazon to locate to a low-tax Wales, provided we leave the single market. We know the Welsh Government is at odds with us on this decision, but we respect everyone’s decision here, and everyone’s entitled to their opinion.

We would also like to see lower income taxes. We spend vastly more per head on health and education than they do in England. Indeed, we spend more per head on all public services. In England, they spend about £8,800 per head. Here in Wales, we spend a little over £10,000 per head—around 10 per cent more than the UK average. However, tax revenues are much lower, at around £7,500 per person, and any proposals to lower income tax in Wales would increase the fiscal deficit and place a greater burden on our English counterparts as well.

So, the Welsh Government would like to introduce a whole raft of new taxes. They are considering introducing a tourism tax, citing that a small levy on tourists has been introduced elsewhere in the world. A tourism tax would be bad for Welsh tourism. In my region alone, I have two main tourist areas. A small levy may not deter tourists, but the bureaucratic and fiscal burden that this would place on our tourism businesses would damage the tourism economy. What proponents of the tourism tax don’t tell you is that the countries that adopt this tax offer reduced VAT rates to the tourism sector, which helps offset the burden of collecting and processing tax.

The Welsh Government’s proposals for a vacant land tax risks undermining the fragile house building sector by making house building more expensive in Wales. We can ill afford the demand for house building in Wales to stall now, at this crucial time, when we need affordable house building to be encouraged to enable our many young people to get a foot on the housing ladder.

Proposals to introduce a disposable plastics tax warrant further consideration, certainly, but it should be UK wide if we are to avoid the packaging industry, which is a large employer in Wales.

The Welsh Government are also proposing to introduce a tax for people to pay for social care, and people are asking what they pay national insurance and tax for, and feel that that this is possibly a duplication of payment.

Of course, there have been even more ideas for new taxes, which can be explored further: a sugar tax, a sunbed tax, a water tax. Wales doesn’t need new taxes; it doesn’t need an increase in the tax burden. What Wales needs is a Welsh Government that can spend the taxes it receives wisely.  We need to encourage economic growth and learn from any past mistakes that have been made, because a mistake is an opportunity, after all, to learn and do it differently next time. As a person who is passionate about my country, I want Wales to reach its full potential, and I look forward to working with any party that wants to see Wales succeed. Diolch yn fawr.

With the UK budget today, I think some of the implications of tax devolution, perhaps, hit home rather more clearly than they did before, because the implications for Wales of decisions made on tax don't just reflect those that are made in this Siambr, but also those that are made in Westminster. I served on the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Bill committee as that went through and listened to what the Cabinet Secretary said. Since then, he's announced just a few weeks ago some changes to how LTT will apply here compared to SDLT in England after April. Many in my region, particularly in the large parts where house prices are relatively low, will welcome that they will pay up to £500 less stamp duty if the house is between £125,000 and, I think, £400,000—unless, of course, they are a first-time buyer. 

We welcome this eye-catching tax cut, which we will enjoy perhaps for four-and-a-bit months in Wales until the Cabinet Secretary potentially takes that away when that tax is devolved and becomes the land transaction tax. Now, I don’t know if that was his intention. He set out what his intentions were a few weeks ago, and perhaps he will now reconsider them in light of the decision that has been made in Westminster, because we may be seeing something of a mini house price boom in Monmouthshire over coming weeks. Not only is there the abolition of the Severn tolls, but there is the potential for first-time buyers purchasing a house worth more than £150,000 to make savings of up to £5,000 if they move and manage to complete between now and early April, when the Cabinet Secretary will take responsibility for their taxation. I wonder in the context of this debate whether he might perhaps make it clear to those people whether it is indeed a sensible thing for them to rush into buying a house now to try and avoid his higher rates from April—or will he reconsider those rates in light of the decision that’s been made today?

I also wonder whether he will look to gouge more money from some of the higher prices—not just house prices, but commercial property prices. One of the significant announcements he made is that, from April, we will be charging a higher rate on the higher-value commercial properties, and one thing I think that the Welsh Government has done quite well is what it's done to support and develop the office market in Cardiff, and perhaps to try and draw in employment, including many people from my region. But if the transaction tax goes up from 5 per cent to 6 per cent on those commercial properties and those big office developments then I wonder if some of those developers may choose to concentrate their activities on England rather than perhaps to make the purchases, and, in many cases, developments, they otherwise would in Wales, particularly if they fear that this is just the beginning of an attempt to gouge them for more money.

We have a comprehensive tax base—that is what we say in section 2, and I’ve always understood that the tax base multiplied by the tax rate led to the total tax take. I think Nigel Lawson set this out particularly well in his Mais lecture in 1984, that what he wanted to do was to expand the tax base but reduce the tax rate. That was a much better way of raising money, so I’m glad we have that in our amendment for the motion today. But I wonder, in developing that comprehensive tax base in Wales—. I congratulate the Government again on what they’re doing on the childcare offer, and the focus on putting that on children whose parents are working and trying to help people into work. One of the implications of that is, potentially—and this will be from September 2020, except for the pilots, and once we have tax devolution—that might lead to people paying more income tax, if that offer actually does help raise employment, or perhaps the amount of hours people are working. For the first time, that benefit, given the devolution settlement in tax, would flow through to Wales and the Exchequer in a way, perhaps, that it hadn’t before. I also hope that the Government will co-operate more closely with the UK Government and look very hard for ways it can reduce tax avoidance, using the levers and powers that it has.

I’m running out of time now, and we won’t benefit until April 2019, but I do have some ideas on that front that I would very much welcome discussing further with the Cabinet Secretary.

Since being elected in 2011, most of the discussions I’ve heard in the Senedd regarding taxation have been about reducing it—although not quite as extreme as Neil Hamilton this afternoon—rather than the need for taxation to pay for public services. When you look at the cost of private education and private healthcare, it puts into perspective the value for money we all get from our taxation system.

Taxation is raised to pay for public services. Too many people believe we can have the same quality of public services as Scandinavia but have a taxation system that is more akin to that of the United States of America. It is not by random chance or serendipity that those countries with higher tax levels have the best public services and those with lower tax levels the poorest. It’s because taxation is necessary to raise the money to pay for the public services that we all need—services such as the roads I travelled on into the Assembly today, the safety of people in work, the safety of food, education, the health service, which I and my constituents depend upon, and the policing of our streets. Quality public services, be they health, education, or infrastructure, come at a substantial cost to the public purse, and the only way of paying for them is via taxation. Taxation can be on income, profit, consumption, expenditure, or value of land and property, or a combination of all of them. But, if people want quality public services, these are the taxes needed to pay for them.

Whilst nobody likes to pay taxes and some rich individuals and multinational companies are experts at reducing their tax payments, for multinational companies, corporation tax is an optional payment whose value can be reduced by such things as intracompany payments for intellectual property rights, or transfer charges for goods and services, or ensuring that the point of sale for goods for people in Britain occurs outside Britain and profit occurs offshore. All of these have been used by some of the largest companies in order to reduce the amount of corporation tax they pay in Britain.

On devolving corporation tax, while I suspect that Plaid Cymru want to do it so they can reduce it, unless reduced to almost zero, it will not be competitive with the offshore British protectorates, such as the British Virgin Islands, for multinational companies. I don't think corporation tax has got much of a life left in it. It is going to, at some stage, have to be replaced, because it is only paid by smaller companies who only deal in the country they're in.

Providing quality public services means that if some people do not pay then either public services suffer or others have to make up the shortfall. Every time tax cuts are made, they are shown as beneficial and they appear to be for those who are paying less tax and have more money in their pocket. The effect that these reductions in Government income have on public expenditure on services such as health, local government and education are completely ignored until the cuts start affecting people. Some of those in favour of reducing public expenditure are amongst the first to oppose any cuts in services. 

The more difficult a tax is to avoid, the more unpopular it is with the rich and powerful. By far the most difficult taxes to avoid are the property taxes—non-domestic rates, council tax. There are no tricks, such as using internal company transactions or having non-domiciled status, to avoid paying the tax. The buildings, whether they are residential, manufacturing, commercial or retail, are not movable and the tax becomes liable on the property and has to be paid.

I also welcome the Welsh Government’s consultation on the possibility of introducing innovative taxes and the list of a levy to fund social care, a disposable plastic tax, a tax—[Interruption.] Certainly.

Thank you for giving way. I think you will recall the Bevan Foundation report, 'Tax for Good: New taxes for a better Wales', which was published last year and included a proposal for a tax on takeaway packaging. And then, of course, as you said, the Cabinet Secretary consulted widely on ideas for new taxes and published a shortlist, which included, of course, the disposable plastic tax. Today, we hear the Chancellor is following our chancellor Mark Drakeford's lead in considering such a tax. So, do you agree that Wales is at the forefront in considering such a tax to protect the environment, as we were with the plastic bag levy?

Yes, certainly. I've supported a tax on disposable expanded polystyrene packaging, especially that used for food trays in takeaway restaurants, for a very long time.

On the tourist tax, it's common around the rest of the world. I actually paid a tourist tax when I was in Dubrovnik; I just didn't know I was paying it. I only discovered it when I looked at places that had a tourist tax.

If you look at the cost of hotel rooms—for personal reasons, I spend a lot of time staying in Travelodges in Bangor and Caernarfon, and the price of a room there can vary quite dramatically. It's nothing to do with taxation; it's due to supply and demand.

If we desire quality public services, then we have to pay for them via taxation. This is not the start of a campaign for higher taxes, but it is linking taxation with expenditure. Can I just say—? I want to live in a country where, when you have an accident, the first responder checks your pulse, not your insurance policy.

Thank you very much and I call on the Cabinet Secretary for Finance, Mark Drakeford.

Diolch yn fawr, Dirprwy Lywydd. Less than five months ago, in this Chamber, we debated the power to create new taxes here in Wales. The Assembly voted unanimously in favour of a motion that recognised the need to test the new machinery that has been created for developing a new tax and welcomed a wide range of potential ideas for using this power. Indeed, in his contribution to that debate, Neil Hamilton commented how he would certainly support the Government motion. He remarked how he was in favour of maintaining the link between Government decisions and accountability for them through the system of raising taxes. He even agreed that devolution of taxation does give us opportunities.

Well, less than five months later, those opportunities have now turned into complaints that experiments could risk reputational damage to this institution—the sort of experiments that we've seen during the whole period of devolution: the experiment that was extending free travel on buses to older people and disabled people; the experiment that was banning smoking in enclosed public places and extending that to cars where children are carried only a year or so ago; the experiment that was the plastic bag levy; the experiment that was organ donation. This place is based on experimentation. It's what devolution was always meant to be: a living laboratory in which different parts of the United Kingdom are able to try out new ideas, to learn from one another, to see what is effective. And to think that experimentation is something that leads to reputational damage I think is to fly in the facts of the way in which devolution has embedded itself in the minds and in the places that we live in. And we intend to go on doing that. We certainly intend to go on doing it as far as minimum unit pricing is concerned—not a tax measure, of course, but another way in which, by using new and innovative policy approaches, we can make a difference in the lives of people here in Wales. 

Will you take an intervention?

Yes, of course.

I'm very grateful for your taking the intervention. I don't disagree with you that devolution does give us that opportunity to try new things and, in fact, many of those things I've been a passionate supporter of, that you listed, but you do accept that sometimes when you raise the prospect of a new tax, there is the potential to cause some reputational damage to either a Government or a nation in terms of particular industries that might be the subject of that tax. That certainly appears to be what might be happening with the tourism tax idea—just the fact that an idea has been discussed and that the door's not yet shut on it. 

Well, I wouldn't agree with him about that, Dirprwy Lywydd. I don't think it does damage reputations to discuss ideas, even when there are ideas we might disagree about. I think it is possible to have a debate about ideas that contributes to the reputation of this institution rather than, as the motion suggests, diminishing it.

There will be Members in the Chamber, I know, who will remember that famous historian, Alan Taylor—A.J.P Taylor—and will remember his review of a book by his rival historian, Hugh Trevor-Roper, in which Alan Taylor said that the book 'would have damaged Trevor-Roper's reputation as a serious historian had he ever had one', and I cannot help but think that the motion is doing the same as far as the reputation of the UK Independence Party is concerned. It's not about damage to the reputation of the Welsh Government or the National Assembly for Wales. It might have done damage to the reputation of the UK Independence Party, had it ever had one to damage. 

Now then, having turned its back on experimentation, the motion then turns its back on taxation itself. The mover offered us his normal assertion that cutting taxes is the way to prosperity. In that very strange combination of enthusiasm for both libertarianism and Singapore, he said to us—it is very hard to hold those two things in your mind at the same time, I agree—. He failed to draw any attention to the fact that there is no evidence in general that lower taxes boost growth, though badly designed taxes can hamper it, and, indeed, the OECD has found that taxes used effectively, for example, to combat inequality, support economic growth, rather than frustrate it. The language of burden and punishment in the motion tells its own story, and it sets the party that moved this resolution aside from other parties in this Chamber.

By contrast, Steffan Lewis, in moving the Plaid Cymru amendment, recognised the opportunities bought about by tax devolution and the sense in exploring innovative tax possibilities. He highlighted a particular form of plastics tax and he restated the call to the UK Government to devolve air passenger duty to Wales. There is little in the amendment with which we would disagree, and a great deal with which we are in agreement. Members will understand that the sequence in which we will vote this afternoon means that we will have to oppose the Plaid Cymru amendment in order to reach the Government amendment, but that is procedural rather than substantive in terms of what that amendment had to say. Indeed, the Conservative Party amendment had two components of its three that we could have supported. I won't dwell on the tourism tax either, as Nick Ramsay didn't, simply to say that there is no proposal to introduce a tax on the tourism industry. There is a debate on four potential new taxes, none of which is yet at the proposal stage. 

As Jane Hutt has said, you cannot help but notice, however, that the Chancellor of the Exchequer has taken up two of our four ideas over recent days. Today, he has proposed a new plastics tax and over the weekend a vacant land tax was clearly in his mind when he complained of the way in which planning permissions granted in London fail to be taken up by those who have those planning permissions, and leave the land sitting vacant rather than being brought into productive use. 

I'll take the chance to respond specifically to the point that Mark Reckless raised on the land transaction tax. I'm tempted to point out that it is lucky for Welsh taxpayers that the Government resisted his amendments during the passage of that Bill, which would have required me to have laid regulations by now before this Assembly on tax rates and bands. Simon Thomas, I can see, remembered the debate in which I said that. It would give a false sense of certainty to people in Wales if I were to bring those regulations in front of this Assembly before I had an opportunity to consider the impact on the rates and bands I proposed of any changes made in the Chancellor's budget. Because those regulations are not in front of the Assembly, I now have an opportunity to consider the changes that have been announced today, and I certainly will do that. And the regulations that I will bring forward will be regulations constructed in the light of the full facts.  

Will the Member give way? 

Yes. 

He talks about not engendering uncertainty, but those first-time buyers, particularly in the higher value areas, who may be rushing in because they fear he's going to increase their tax rate next April, as he said before—would they be wise to do that or should they hold off?  

Let me at least reassure them of this: they will not be knocked over in the rush, because the number of first-time buyers in Wales who are buying houses worth £300,000 means that it would be perfectly possible to form an orderly queue in order to get the advice that the Member is looking for. And I will do my best to resolve the uncertainty created by the Chancellor today by coming forward with proposals that I will be able to reflect on in the light of today's announcements. 

Dirprwy Lywydd, I've before in front of the Assembly set out the way in which this Government wants to go about its tax responsibilities, not in the old way of producing conjuring tricks out of hats, as we've heard this afternoon, but in a way that is open, that is engaged and that encourages members of the public to be part of this consideration. In July, we voted unanimously in favour of an approach that was based on that way of doing things. I hope that we'll be able to reaffirm our commitment to this new way of exercising our fiscal responsibilities in Wales again this afternoon.     

Thank you very much. I call on Neil Hamilton to reply to the debate. 

Thank you, Deputy Presiding Officer. I'm delighted to follow the finance Minister. I always enjoy his donnish humour—and his reference to A.J.P. Taylor, a great historian. A.J.P. Taylor was fearless in championing unpopular people and unpopular causes, so I'm sure he would have been more sympathetic to me than the finance Secretary. His books contain many great truths; I remember once he said, when asked what the future was going to be, that historians have difficulty enough in predicting the past, let alone predicting the future. That's something that the finance Secretary, of course, will have to do in respect of the effects of the UK budget and the changes that he might make in consequence, if any. 

But it was an interesting point that Mark Reckless made, and it's an interesting illustration of the possibility of tax competition within the United Kingdom, which should, in my view, have a depressing effect upon tax rates. And I think the other point that Mark Reckless made that is worth remembering is the Lawson dictum that we should concentrate upon broadening the tax base and then reducing tax rates. The experience of the 1980s certainly was one of massive increases in public revenues on the one hand whilst we had substantial reductions in the rates of taxes, particularly personal taxation. So, the great boom at the end of the 1980s, which was wrecked by the exchange rate mechanism, of course, was entirely the result, in my opinion—[Interruption.]—entirely, in my opinion, as a result of the tax reductions in the Howe and Lawson budgets in the 1980s. If only Nigel Lawson had not got fixated upon Britain's membership of the exchange rate mechanism, the Government's economic policy of that time would not have been undermined.

We've had an interesting debate. Nick Ramsay took me to task for the colourful language of the motion, but I recall that Steffan Lewis not so long ago wrote an article in a newspaper saying about how the Senedd was rather too boring, so I think he ought, actually, to applaud my colourful language in the motion today. Just to go back to Nick Ramsay's speech as well, I didn't say that I accepted the Conservative amendments; I did say that I agreed with them. Acceptance and agreement are two totally different things, of course.

But there is a broad agreement around the Assembly on devolution of taxes. I'm, personally, as I've said before, strongly in favour of them. Of course, we do have the opportunity to experiment—I'm not against experimentation per se. What I'm against experimenting with are taxes that are likely to do damage to the Welsh economy and the prosperity of our nation. So, it's the nature of the use that is made of the freedoms that we now have, and which I hope are going to be extended in due course, that is the essence of this debate.

Mike Hedges made some interesting points in his speech with which I couldn't disagree. Of course, if we want quality public services, we have to pay for them, but you can design a tax system that is going to maximise the public revenues on the one hand or minimise them on the other, and what we need is a tax system that is going to do that. Of course, we're not talking about privatising the health service or education, and therefore they will have to be funded by taxation in some shape or form. But if you look at the history of taxation in Britain since the war, in spite of massive differences in tax policies under successive Governments, the tax take as a proportion of GDP has remained remarkably constant at around 35 per cent, even in the years of high-taxing Labour Governments and relatively low-taxing Tory Governments. That should tell us something—that if we are to succeed in future in making the country more prosperous then we should go for simpler taxes and lower taxes.

Thank you very much. The proposal is to agree the motion without amendment. Does any Member object? [Objection.] Therefore, we will defer voting under this item until voting time.

Voting deferred until voting time.

Unless three Members wish for the bell to be rung, I will now proceed to voting time. Okay, thank you.