Thank you, and thank you to all Members for their contributions to the debate today. Of course, as we move further into Senedd term, we'll continue to keep under review the vital role that WRIT plays as a partially devolved tax here in Wales.

I think Llyr opened his comments this afternoon by saying we've discussed Welsh rates of income tax many times in the past few weeks, and I think that's a really good thing, because there's so much interest from across the Chamber, from Senedd committees, from academic bodies outside the Senedd. I think sometimes we just have to remind ourselves that we are at the start of a journey here. We only had Welsh rates of income tax introduced in April 2019, but it's absolutely right that we do have that eye on the future to consider where we go next. 

Just to respond to some of the specific points, behavioural impact I think was something that was raised very strongly in the debate. I would say behavioural change isn't the only thing that we consider when we consider Welsh rates of income tax. We obviously have to think of the overall economic picture, people's overall tax burden. I think the points that Mike Hedges was making then were quite powerful in that sense, setting out the real choices that many people are facing in Wales at the moment, and also, of course, the promises that we've made to people in our manifesto in respect of Welsh rates of income tax. 

To turn to the point about behavioural impacts, a change in tax rates is obviously likely to affect people's behaviour, and that will then have an impact on the amount of tax that is collected. Llyr Gruffydd referred to our ready reckoner, which takes account of what we understand the behavioural impacts to be, based on the Swiss study. Of course, we look closely at the experience of Scotland, where they have recently introduced higher rates for those on higher incomes. In the current year, the Scottish income tax revenues are actually expected to make a negative net contribution to the Scottish Government's budget. The Scottish Fiscal Commission is expecting a net negative impact of around £100 million on the Scottish budget this year, despite an additional tax effort by Scottish taxpayers of around £850 million from rate and threshold changes. That really does emphasise the need for us to go into this very clear-sightedly, with the evidence base we need. Where there are gaps in evidence, absolutely we will be looking to explore what more we can do to fill those gaps.

HMRC did analyse the earlier tax changes in Scotland, and they produced some estimates on behavioural impacts. They have been published, and they were presented at our tax conference last year. I thought that was a really important intervention. Those estimates, though, didn’t cover migration responses to tax changes, which would obviously be of interest to us here in Wales. HMRC is now progressing work on a longitudinal data set, which will hopefully allow some additional analysis of the behavioural impacts of tax changes, including migration responses. We’ll be looking very carefully at that, and our officials are in regular contact with HMRC.

On the points that were made about the further devolution of income tax, further powers to vary income tax thresholds would provide us with some additional policy tools in the Welsh Government. We do have to consider very carefully the needs and the risks, including the risk of much greater exposure to relative tax-based growth between Wales and elsewhere in the UK. I think that would be particularly of concern to us in relation to the higher and additional rates, where our exposure is currently only 10p in each band. Growth in revenues from these two bands does tend to be more volatile from year to year than the basic rate revenues, and tends to vary more between different parts of the UK. This affects, of course, the year-to-year net budgetary impact of income tax devolution via the block grant adjustment mechanism, so it's potentially a risky step for us to take. We would have to do that with clear sight, again.

When we’ve talked about this important agenda recently we have, I think, all looked forward to the final report of the constitutional commission to see what it has to say on our tax powers and the process for seeking the devolution of further tax powers. I’m sure that will be part of the mix. I just want to give colleagues my reassurance that I see this as an ongoing discussion. It’s an ongoing area where there does need to be greater evidence procured, and we will obviously continue to have those discussions in order to find a way forward.

I just want to remind colleagues, as I come to the end of my contribution here, that the WRIT resolution must be passed ahead of the final budget. Without WRIT revenues, up to £2.8 billion of financing within our final budget would be unavailable. That, of course, would render our 2023-24 final budget unaffordable. I hope colleagues would agree that that would not be an acceptable outcome. So, I think despite the extensive challenges that we face, we have taken some difficult decisions based on collaboration, transparency and sustainability, and I would commit to continuing to take that approach as we consider the role of income tax in future years.