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Cameron calls for ‘real debate’ on Welsh taxes

29th Oct 2014
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David Cameron has called for a “real debate” about tax-raising powers for Wales after he was challenged during Prime Minister’s Questions to ensure that Wales receives the same level of funding as Scotland. The Welsh government is consulting on the establishment of a Welsh revenue authority and arrangements for devolved taxes.

“Given that the prime minister said that the Barnett formula is here to stay, is it not high time now to give Wales parity of funding with our friends in Scotland and once and for all give fair funding to Wales?” Plaid Cymru’s Westminster group leader Elfyn Llwyd asked.

Cameron replied: “I think what we need to see in Wales is a real debate now about what I would say is a double-yes. Yes to another referendum on tax-raising powers, and yes to those powers so that the Welsh Assembly takes greater responsibility for raising and spending more of its own money. I think that is the right pathway.”

The Welsh government launched a consultation last month on proposals to establish arrangements for collection and management of devolved taxes in Wales.

Collection and management powers should be vested in a new legally-constituted public body, the Welsh Revenue Authority, it said. “The adoption of such a model for tax administration is consistent with international best practice.”

The consultation discusses options for efficient and effective collection of Welsh taxes; actions to encourage tax compliance and “tackle non-compliance, including tax avoidance”; and arrangements for resolving tax disputes.

Comments are invited by 15 December 2014. This is the first of three consultations concerning powers for Welsh taxes. Consultations on proposals for Welsh taxes to replace stamp duty land tax and landfill tax will be held in spring 2015.

Wales Bill

The UK government agreed a package of measures earlier this year in response to the Silk report on devolution in Wales. These included the partial devolution of income tax, subject to endorsement in a referendum approved by two-thirds of Welsh Assembly members.

The Wales Bill, introduced by the UK government in March, includes a power to set Welsh income tax rates for Welsh taxpayers.

The Bill, as amended at the House of Lords Committee stage earlier this month, is available on the UK Parliament website. Report stage in the House of Lords is scheduled for 11 November.

‘Welsh priorities’

Jane Hutt, the Welsh government minister for finance and government business, said in a foreword to the consultation document: “The devolution of new borrowing and tax powers is a significant step forward and provides us with an opportunity to develop funding arrangements that are better suited to Welsh circumstances and priorities … Next year we will bring forward an Assembly Bill that sets out our proposals for tax administration in Wales.”

She added: “The taxes we develop will be fair to businesses and individuals who pay them; be simple, with clear rules which seek to minimise compliance and administration costs; support growth and jobs that in turn will help tackle poverty; and, provide stability and certainty for taxpayers.”

The ICAEW Tax Faculty said in a note about the consultation: “We are pleased to see that many of [these] principles for Welsh taxes follow our own Ten Tenets [for a better tax system].”

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