I'll start off by saying I'm ideologically supportive of increasing the tax rate on the two higher income bands. Higher paid people should pay more for the provision of public services. It's part of what we pay for living in a civilised society. The problem we have is, one, the partial devolution of income tax—it's only one part of the tax on income we have devolved. We don't have dividend income devolved and we don't have capital gains tax devolved. So, you've got two other taxes on income that are not devolved. We have no control at all over dividend taxation; we don't even get any of the benefit of it. And this goes to it simply: people who work for themselves can benefit from a range of perks. But the best for self-employed people is to set up a company, pay yourself a dividend not a wage, and then you will pay a substantially lower tax rate—8.75 per cent basic rate, 33.75 per cent higher rate, 39.35 per cent additional rate. So, what we've got is that people are using, now under the current system, a means of moving into dividend income rather than a wage, because that saves them, from the numbers I've just talked about, substantial sums of money.

Further, we have cross-border movement between England and Wales. There is no tax advantage or disadvantage of being a Welsh or an English taxpayer, and whilst some people are down for the wrong country some of the time, the net effect should be zero because there's no benefit of doing it. If you bring an advantage in, then people may well register in the lower taxing areas they can legally choose. Some people can not just move over the border; some people who have multiple properties can decide which property they wish to have as their major residence, and as such, change how much tax they pay. 

Then we have non-domiciled status to avoid income tax. This is something that I think is fundamentally wrong. We're not going to be able to change that today, but I think it's something we need to talk about. Capital gains tax is charged at a rate of 10 or 18 per cent for basic rate taxpayers, and 20 or 28 per cent for higher rates, all substantially lower than the tax rate. Increasing the lower tax rate would affect some of the most poorly paid in society. A 1p increase in income tax would mean for every £100 of tax currently paid, £105 would need to be paid. What does £5 mean? For those of who shop in Lidl, it means half a pound of butter, a loaf of bread and two pints of milk. To people who are on low incomes, that is an important £5 when they're buying food. When we talk about financial need, increasing the tax bill will not help.

The number of additional-rate taxpayers in Wales is shown by HMRC to be under 1,500 for this year. These are, of course, generally mobile. Raising the additional rate will raise very little money for Wales. My expectation would be a decrease in the income from it. I will be supporting the rates suggested. What I would urge the Welsh Government to do is partial devolution of all taxes on income, which would mean partial devolution of dividend rates and partial devolution of capital gains, so that we could actually tax them at the same level as income tax. That would be fair and that would mean that we could get substantial sums of money from people who found a way round the system. I'm glad the First Minister is nodding. I think this really is an area that we really ought to be giving some thought to.

I think Silk got it wrong, and I know, looking at the Chair of the Finance Committee, we're hoping to get Paul Silk in to discuss where we are with the devolution of taxation. I think there are some things here that were unintended consequences of the devolution of taxation, and we need to get it right. Taxing dividends and capital gains as we tax earned income would be a much fairer way of going forward.