Devolution was intended to significantly improve the economic performance of Wales. One of the arguments put forward in favour of devolution in the late 1990s was that Welsh interests were being neglected. We were told that the Welsh economy’s problems could only be solved by tailor-made solutions created here in Wales. And yet, Wales still has the weakest economy in the United Kingdom, Wales remains at the bottom of the gross value added league table for the UK home nations, and GVA in Wales remains well short of the original target of 90 per cent of the UK average. Earnings in Wales remain the lowest in the whole of the United Kingdom, and Wales, together with Northern Ireland, has registered the lowest growth rate of gross disposable household income per head in the last 10 years.

The devolution of powers to vary income tax in Wales from this April represents a significant milestone in the devolution process. It also represents a huge opportunity to radically change our economic development and environment. Government has no money of its own. Actually, taxation is the money raised by the Government to run the Government, as the Government finance their expenditure by imposing charges on citizens and corporate entities for the country, to Government to run by taxation and encourage or discourage certain economic decisions.

Government has no money, as we’ve said. Every penny that Government spends comes from the taxpayer. By allowing people to keep more of the money they earn, you allow them to make their own spending decisions. Low-tax economies are the most successful economies in the world. Cutting taxes boosts the economy, increases economic growth, and delivers higher living standards. Wales cannot afford a tax system that acts as a barrier to economic growth and aspiration. And increased tax burden on Welsh taxpayers increases the risk that it will restrain economic growth and cost jobs.

In its 2016 election manifesto, the Welsh Government made a commitment not to increase Welsh rates of income tax during their Assembly term. However, they have stated that they will carefully consider a tax rate to, and I quote,

‘ensure they continue to generate sufficient revenue’.

Just three months ago, the new First Minister said, quote:

‘I will not move away from our manifesto commitment unless I'm compelled to do so, but I don't rule out the possibility that circumstances could change in a way that do have that compelling impact.’

Quote closed.

It is clear that Welsh Government cannot be trusted to keep its manifesto pledges. Make no mistake, any tax increase would be aimed at and hit earners in the basic tax brackets. Most taxpayers in this situation would be forced to shoulder the burden of higher taxes. However, we should not underestimate the effect increased tax will have on outward migration. The Welsh Government-backed report ‘The Welsh Tax Base’ has acknowledged that there would likely be some behaviour response from taxpayers. These include individuals seeking alternative jobs, changing the number of hours worked, and migration out of Wales. We on this side of the Assembly are not the only ones with this concern. The CBI in Wales has rightly recognised that, in the code, raising Welsh income tax should be a last resort and not a first response, and in Plenary last month, Lynne Neagle spoke of her having to reassure constituents who had received a letter from Her Majesty's Revenue and Customs and were alarmed at the prospects of increasing tax in Wales. Minister, you have the power to put people's mind at rest. I ask you now: take this opportunity to reaffirm your election manifesto to promise and state clearly that income tax will not increase during the term of this Assembly. I know from this April that the basic rate reduces from 20 to 10 per cent, higher rate from to 40 to 30 per cent, additional rate from 45 to 35 per cent. It's a big impact that this is going to make, and there are certain areas, Minister—they are advocacy, broad base, compatibility, convenience, efficiency, restricted expenditure, exemptions, and simplicity—in taxation that are highly appreciated. I look forward to your response on these matters. Thank you.