Llywydd, thank you for the opportunity to open this debate on the Welsh rates of income tax resolution for the 2023-24. Welsh rates of income tax were introduced in April 2019 and apply to non-savings, non-dividend income tax payers resident in Wales. Welsh rates of income tax raise well over £2.5 billion each year towards the funding of the Welsh Government's budget. The Welsh rates for the next financial year were announced at the draft budget. The motion to set Welsh rates of income tax for 2023-24 will mean that Welsh taxpayers will continue to pay the same income tax as their English and Northern Irish counterparts.

Our approach to setting income tax rates for next year is set squarely within the context in which we operate as a fiscally responsible Government. We face considerable pressure on our public services due to high levels of inflation, and our residents are challenged every day with the cost-of-living crisis. Our income tax base is relatively weak, which mean that any significant change to our resources through income tax rises would require an increase to the basic rate, all while our residents are struggling to pay their energy and food bills.

I have been very clear that now is not the right time to increase income tax in Wales. The UK Government's decision to freeze income tax thresholds means that our lowest earners have now been dragged into the income tax system. Raising the rates or making any changes now would add an additional contribution on those least able to afford it, and at a time when the overall tax contribution is at its highest level for 70 years. The context we have faced during this budget process has been incredibly challenging. Inflation has eroded our budget to worryingly low levels, and the UK Government has failed to lift our budgets to address that funding gap. The reality has been that we could not meet all of the pressures identified within the funding available. Despite this, our 2023-24 budget was designed to maximise the impact of our available resources through balancing the short-term needs associated with the ongoing cost-of-living crisis whilst also continuing to make longer term change and deliver on our programme for government ambitions.

We have a responsibility to deliver a budget that is fully costed and balances spending needs with the financial pressures people in Wales are already facing, and retaining Welsh rates of income tax for each band at 10p in the pound allows us to do that. Based on the Office for Budget Responsibility's forecasts, setting the rate at 10p for all bands is expected to raise £2.795 billion in 2023-24. Although rates haven't changed, WRIT is expected to have provided an additional £89 million to the Welsh Government budget since it was devolved. Together with the funding received through the block grant, Welsh income tax contributions are a vital part of the budget, and I strongly recommend that Members support the motion today so that we can continue to support public services in Wales at this very challenging time. The motion today also ensures that we continue to deliver our programme for government commitment not to take more in Welsh rates of income tax from Welsh families for at least as long as the economic impact of coronavirus lasts.

Looking further ahead, we'll be guided by our tax principles, which commit us to designing clear and stable taxes that deliver our progressive agenda. Those with the broadest shoulders should pay a greater share. Ensuring that we make the most of our devolved tax responsibilities also means working closely with His Majesty's Revenue and Customs on the administration of WRIT. As highlighted in the National Audit Office's most recent report, the robust processes and governance arrangements with HMRC provide a strong basis for the effective and efficient collection and administration of WRIT, going forward. The WRIT out turn for 2020-21 was published by HMRC last year. The outturn was fairly close to forecasts, given the exceptional economic conditions at the time. A positive reconciliation amount has been added to the budget for 2023-24. I look forward to the debate today, and the Senedd is asked to agree the Welsh rates resolution that will set the Welsh rates of income tax for 2023-24, and I ask Members for their support this afternoon.