Diolch, Dirprwy Lywydd. I'm pleased to move this motion today, brought forward by the Welsh Conservatives. To quote Senator Bobby Kennedy in 1966:

'Like it or not we live in interesting times.' 

Well, like it or not, we again today live in interesting times, and devolved taxation, whether you like that or not, is with us. As we know, from April 2019, this institution will have the power to vary the rates of income tax, a powerful tool in addition to other new Welsh taxes—land transaction tax and landfill disposal tax. This is in addition to existing powers to raise and set business rates. In total, the Welsh Government is set to get around £5 billion in tax revenue from April.

So, how do we make this work best for the people of Wales? More importantly, how can we use these new taxation levers to generate growth in our economy? These are, of course, questions that we never needed to ask in Wales until now. They are big questions about how we manage the public finances, how we take people with us on this journey, how we develop a better relationship between Government and the people, a relationship fitting for the modern age, a relationship fitting to the new age of accountability for this Assembly.

It's been a privilege to be on the Assembly's Finance Committee over the last few years whilst these issues have been discussed at great length. A lot of good ideas have come forward from Members of all parties. That's how it should be. Tax devolution does not just belong to one party, one group, it belongs to all of us. It's our responsibility to get this right, in the areas where tax is already devolved and in the area of income tax as well, to make a success of the new powers, and as we so often say on Finance Committee, not just to make a success of it but to make Wales a beacon of best practice. 

How can we attract job creators, investors and entrepreneurs to Wales to set up new businesses, create new jobs and enrich our economy? Taxation can help us do all of this, but only if these new powers are used in the right way to attract support and nurture investment, rather than discouraging ambition and aspiration. Evidence shows that low-tax economies are more favourable to business start-ups, attract job creators, and can actually increase revenue because you're encouraging greater economic activity.

This means, at the end of the day, we have more money to invest in first-class public services. Let's be honest, our public services do need investment, we can't allow Wales to fall behind other parts of the UK in terms of how much we have to spend to invest in schools and hospitals. So, I want the Welsh economy to be more competitive. The Welsh Conservatives want the economy to be more competitive. I think every party represented in this Chamber would in their heart of hearts want that to happen. We need to be encouraging people to come here to set up new businesses and create those new skilled jobs we need. 

Professor Gerry Holtham was one of the first academics to look at what benefits devolved taxation could bring to Wales. He pointed out that making some minor adjustments to the basic rate of income tax would, aside from not raising huge amounts of money, actually have very little consequence for the tax base, since basic rate taxpayers tend to be less mobile then higher rate taxpayers. In fact, he concluded that the most productive change to taxation would be to drop the upper rates by 10p in the pound, since this could have the effect of drawing in higher rate taxpayers from across the border, as well as encouraging entrepreneurship and aspiration at home. 

One thing is clear, we need to fundamentally grow the Welsh tax base and improve its structure. Currently, we have just two thirds of the proportion of higher rate taxpayers in Wales compared to England, and just a quarter of the proportion of additional rate taxpayers.