5. Statement by the Cabinet Secretary for Finance: Vacant Land Tax

Part of the debate – in the Senedd at 5:36 pm on 15 May 2018.

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Photo of Mark Drakeford Mark Drakeford Labour 5:36, 15 May 2018

Mike Hedges regularly reminds us of the different purposes that taxation fulfils—from revenue raising to behaviour shaping—and he's right, this tax has some elements of both. In the Republic of Ireland, bringing in Nick Ramsay's question about lessons to learn, I remember being told by senior officials there that their first ambition was that the tax must raise sufficient revenue to cover the cost of the work involved in bringing about the behavioural change that the tax is intended to generate.

Mike is right: it's the windfall nature of rising land values that people find objectionable, when it is public investment in providing those permissions that causes the value of the land to rise. So, the public has made the effort, and yet it's the private individual who gets the gain, and that's what people find objectionable.

Of course, we did consider an environment tax—a plastics tax, as we were talking about it then. The reason that I decided not to use that as our first testing of the machinery was not for the reason that I mentioned to Mr Hamilton, that it could've overwhelmed the mechanics, but because the Chancellor announced in his autumn statement a call for evidence with a view to creating a UK-wide tax in this area. And I just knew, or felt I knew, that if I'd sent such a tax down the line to test our machinery the answer would have come straight back: 'Well, there's nothing we can do to give you an answer on that until the call for evidence has been completed.' So, we would've stalled the process at the very outset, and that's the reason why I decided in the end not to pursue that avenue.

As far as Mike Hedges's front garden and indeed my own Canton back yard are concerned, I can confirm that both are safe from a vacant land tax.