Part of the debate – in the Senedd at 5:14 pm on 22 November 2017.
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.