7. Welsh Conservatives Debate: Welsh Rate of Income Tax

Part of the debate – in the Senedd at 5:25 pm on 23 January 2019.

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Photo of Mark Isherwood Mark Isherwood Conservative 5:25, 23 January 2019

Thank you. I'm sure that's helped the clarity of understanding of people in Wales. 

Mohammad Asghar said that at the time of the referendum—the devolution referendum—people in Wales were told that our economic problems could only be solved by devolution, but Wales still remains lagging at the back of the UK economic league table. He said that an increased tax burden on Welsh taxpayers would restrain economic growth and damage jobs, and he asked the Minister to reaffirm Labour's manifesto promise not to increase income tax during this Assembly term. I think we got that confirmation at the end. 

Alun Davies, well he bumbled along in his characteristic way. [Laughter.] In saying that nobody—[Interruption.] In saying that nobody called for reductions in expenditure during the budget debates, he perhaps exemplified the confusion between tax rates and tax revenues. But he was right when he called for fair and reasonable taxation that allows us to invest and reflects our ambitions, which is exactly what we're calling for in this debate also. 

Suzy Davies quite rightly said Governments need a tax take, but we're talking about the people's money, that making tax all about the wealthiest doesn't increase the tax taken, and the need to consider that Wales has a far greater cross-border travel-to-work population than, for example, Scotland. 

Neil Hamilton invoked the smashed glass, bricked-up impact of the window tax. He reminded us that people change behaviour to reflect the tax background of where they live and that Wales has to be competitive if it's to be prosperous in the years ahead.

Mark Reckless referred to a fall in revenue since the introduction of the Welsh Government's land transaction tax and warned that we need to be very careful what to do with income tax in this context. 

The finance Minister used the catch-all phrase 'progressive approach'. That can mean many different things when applied to taxation, but rightly she says that we need to recognise the impact on the Welsh economy, jobs growth and fiscal position, looking to fair taxes in the future, and that she'd be supporting the motion and we thank her very much for that. 

Let us remember that, since 2010, Chancellors at UK level have got more tax out of the rich than any of their predecessors. Let us remember that 58 per cent of tax across the UK is paid by the top 10 per cent of taxpayers. In Wales, the top 10 per cent are only contributing 44 per cent because there's so far fewer of them. Let us remember the research in 2016 by Cardiff Business School, which said that reducing the higher rate of income tax in Wales would raise additional revenue by attracting high earners. Let us remember that the Welsh Government itself has admitted that the most it would be able to get out of income tax would be to charge basic rate taxpayers, and the warning by the CBI that raising Welsh income tax should be a last resort, not a first response. Diolch yn fawr.