7. Plaid Cymru Debate: Income tax devolution

Part of the debate – in the Senedd at 6:12 pm on 8 February 2023.

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Photo of Rebecca Evans Rebecca Evans Labour 6:12, 8 February 2023

Yes, I am, absolutely, going to come on to the points within the motion that relate to the rates and bands and so on, but I did want to add that there is considerable uncertainty relating to the impact of raising the higher and additional rates. And the evidence base for any behavioural impact that might occur in relation to any material increase to higher or additional taxpayers is uncertain, because we know that those people have options that aren't available to other people—for example, changing their primary home arrangements to mean that they don't pay income tax here in Wales.

And, of course, we've got that long, porous border with England, and that creates the risk of outward migration for those more mobile taxpayers. And we had some questions yesterday in terms of how we consider that. So, just to reassure colleagues, that is already built into our ready reckoner, which estimates that a 1p increase in the additional rate actually generates a mechanical rate of £7 million, but an actual estimate of only £3 million, due to what we would expect the behavioural impact to be. And I mentioned yesterday that that was relating to the Swiss study, which is seen as the closest proxy that we have. 

Obviously, we do—