The Welsh Government's Proposed New Taxes

1. Questions to the Cabinet Secretary for Finance – in the Senedd on 6 December 2017.

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Photo of Suzy Davies Suzy Davies Conservative

(Translated)

2. Will the Cabinet Secretary provide an update on the Welsh Government's proposed new taxes? OAQ51405

Photo of Mark Drakeford Mark Drakeford Labour 1:37, 6 December 2017

I thank Suzy Davies for that question. Work continues on the short list of potential tax proposals for Wales, as set out on 3 October. It remains my—

Photo of Suzy Davies Suzy Davies Conservative

Thank you for that answer. Oh, sorry, not concentrating. [Laughter.]

Photo of Mark Drakeford Mark Drakeford Labour

Simply to say that it remains my intention to test the new Wales Act 2014 powers during 2018.

Photo of Suzy Davies Suzy Davies Conservative

Okay. Well, thank you for that answer as well, because it gives me a bit of a steer on timing there. Last month, following a debate on potential tourism tax in Bridgend council, the Labour cabinet member for regeneration there said,

'As the cabinet portfolio holder for tourism, I would say that this is the least likely of the Welsh Government options for a new tax to find favour across Wales.'

And then went on to say,

'I think most people would strongly support the alternative proposal of a tax on disposable plastics.' 

The Labour leader of Swansea council has today said he favours a social care tax. When Labour leaders in my region are already dismissing the tourism tax as an idea, would it not be a good idea to actually save some money by not developing that idea and concentrating on the other three options?

Photo of Mark Drakeford Mark Drakeford Labour 1:38, 6 December 2017

Llywydd, I'm very glad to see individuals around Wales taking an interest in this debate, and it's interesting to see that there are a variety of views out there, and that is exactly what we had hoped would happen by bringing forward the debate in the way that we have. It would have been very easy for the Welsh Government to have acted as the UK Government does in fiscal matters by keeping everything entirely to itself and attempting to spring a surprise on everyone else after a decision has been made. I have been very keen to go about our fiscal responsibilities in an entirely different way, to be far more open, to be far more engaged with people who have views. I listen very carefully to what people in all parties say about the four different ideas that we have brought forward. The leader of Swansea would be correct to say that, in terms of public reaction, there has been more support for a plastics tax than any of the other items that we put on our list, but that is not to say that there isn't interest in all of them or that the debate should not continue.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru 1:39, 6 December 2017

(Translated)

I welcome the fact that the Government has done exactly what the Cabinet Secretary has set out—has held an open debate on these new powers, and I welcome the fact that these powers are to be brought to us. Could the Cabinet Secretary confirm the timetable because in the past he’s told the Finance Committee and the Chamber that he will make a decision on the tax that will progress in the new year? Is he in a position to be more specific on what the new year means—are we talking about January, or does the new year extend to Easter, as it can from time to time within Government?

And secondly, to return to the fundamental point, may I echo Plaid Cymru's support for a plastics tax? We're not saying that there aren’t merits to some of the other ideas, but we do believe that this is a more comprehensive idea, which has been developed with public support and relates to a very clear pollution problem that is at the forefront of many people's mind. Of course, it doesn’t tax people for Government, but it taxes people in terms of behavioural change which, in my view, is an important principle for new taxation.   

Photo of Mark Drakeford Mark Drakeford Labour 1:40, 6 December 2017

(Translated)

Thank you to Simon Thomas. I can confirm that we are still working on the timetable. I want to move forward early in the new year, but I’m not willing to move forward without having undertaken the work. One of the things that has changed over the past few months is what the Chancellor said back in the budget in November, because the UK Government is now showing an interest in the area of plastics. So, we would like to have further information from the UK Government in order to see if there is something in the ideas that they’re considering that could have an impact on the possibilities that we are taking forward here in Wales.

Photo of Mark Drakeford Mark Drakeford Labour 1:41, 6 December 2017

It is, of course, as Simon Thomas says, a very important area and the one, as I said to Suzy Davies, that has had the greatest interest from members of the public, and Simon Thomas is quite right to point out that different taxes have different policy objectives behind them. A plastics Act is about influencing people's behaviour, other taxes are more interested in raising revenue. Not all taxes have the same motivation behind them and that's part of what we will need to weigh up when we come to make a final selection of the tax—that we will test out the machinery of the Wales Act by sending into that new machinery.  

Photo of Vikki Howells Vikki Howells Labour

Cabinet Secretary, I was very excited to hear in the draft budget that you were considering a vacant land tax. This is a real issue in my constituency, often with small pieces of land being hoarded for decades, usually the sites of former chapels or workingmen's halls, for example, and the cost to local authorities of trying to take action being prohibitive. As well as the economic loss of land not being brought into productive use, vacant land is often kept in an unsightly and anti-social condition, and this can have an impact on the well-being of communities that is often difficult to quantify. So, how will you take this into account when you look to develop the vacant land tax idea as a workable proposition? 

Photo of Mark Drakeford Mark Drakeford Labour 1:42, 6 December 2017

Well, I thank Vikki Howells for that really interesting and important question. That now means, Llywydd, we've mentioned all four taxes that were on the shortlist this afternoon. I was fortunate enough to have a very useful meeting in Dublin just over a week ago as a result of co-operation with the Government in the Republic, where they made available a series of very senior officials in their Government to talk about the way in which their vacant land tax has been developed. It was both a very instructive meeting and a very encouraging one as well. They made it clear to me the purpose of their vacant land levy is not to raise money; it is to support the planning system and to make sure that, where hard work has gone into identifying pieces of land, making them fit for development, giving them the necessary permissions and so on, that those pieces of land do not then sit idle doing nothing. And they feel it's been a very successful piece of legislation in doing exactly that and, therefore, doing exactly the sort of things that Vikki Howells has outlined this afternoon.

A vacant land tax set and structured fairly could, I believe, help spur development in the Valleys, and housing, of course, is one of the five priority areas in our 'Prosperity for All' publication. This area too, though, Llywydd, has been slightly complicated by the budget on 22 November, because in it the Chancellor announced that he had asked Sir Oliver Letwin to chair an urgent review of the gap between planning permissions and housing starts in England. In what he said, the Chancellor said that he too was willing to consider 'direct interventions' if those were needed in order to make planning permissions that were extant turn into actual activity on the ground. So, here again, we are working to make sure that we have understood the work that will go on in England to see if it has any alignments to the ideas that we have discussed here in Wales. And a vacant land tax, I think, fits very well into that set of policy possibilities that are being opened up not just in Wales, but, clearly, across our border as well.