7. Plaid Cymru Debate: Income tax devolution

Part of the debate – in the Senedd at 6:10 pm on 8 February 2023.

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Photo of Rebecca Evans Rebecca Evans Labour 6:10, 8 February 2023

Diolch, Llywydd. Well, this has been a really interesting debate this afternoon, and I absolutely agree with Mike Hedges that it is really good to be talking about tax in a more open and searching way that is just outside of our normal budget-setting process. So, long may that continue. And Adam Price said at the start that he feared it might be seen as a bit of a dry debate, but I think it's been anything but that. 

So, I will just begin with a few words on our current approach to setting tax rates for the next financial year, but I will then move on to address that longer term issue. So, our approach to setting income tax rates for next year is set squarely within the context in which we operate. And, as a responsible Government, we consider the setting of tax rates every single year, and we do that within the context of the time. We do face considerable pressure now on our public services due to high levels of inflation, and, of course, people across Wales are challenged every day with the cost-of-living crisis. The nature of our income tax base does mean that any significant increase to our resources through Welsh rates of incomes tax would have to mean that we raise the basic rate, and that's at a time when people are struggling to pay their energy and food bills. So, I have been really clear that now isn't the right time to increase income tax in Wales. And, let's remember that, with the UK Government's decision to freeze income tax thresholds, our lowest earners now are being dragged into the income tax system, and raising the basic rate would add an additional tax burden to the poorest people in our society at a time when tax is at the highest level for 70 years, and I don't think it's right to do that at this time.