The Welsh government is asking for suggestions as part of a more collaborative approach towards the development of new taxes. But will the devolution of tax powers add further confusion to an already complex tax system?
Empowered through the Wales Act 2014, the Welsh government will be able to raise its own taxes in areas of devolved responsibility. Wales has already revealed plans for its own SDLT and landfill tax. Starting a debate in the Senedd, Welsh finance minister Mark Drakeford outlined his intention to encourage people and organisations to suggest taxation that would “change behaviours”.
“The power to propose new taxes is an important lever, which we can use to change behaviours and deliver improvements for our communities,” Drakeford said in a statement. “That is why I want to start a genuine debate about how we use these powers to support our commitment to fairness, wellbeing and growth.”
The Welsh government has already received a number of suggestions from the Bevan Foundation’s ‘Tax for Good’ report, focussed on tourism and takeaway packages. However, Drakeford has other behaviours that he wants to discourage: “[W]e could use these powers to change behaviour or decrease negative practices, such as targeting land-banking through a levy on unused land.”
Some AccountingWEB members have noted that the devolved taxes would only confuse an already complex tax system. For example, the introduction of the plastic bag charge typified the strife devolved tax powers could cause, with carrier bag charges drawn up by devolved administrations.
DJKL said: “To me this tendency to charge tax differently by location, Scotland with S prefix on coding and different tax band re higher rate or LBTT is pointless, the whole funding approach re Barnett formula etc. to me makes such tinkering pointless.”
The proposal also failed to excite AWeb member sosleepy who put forward a “New Tax Tax [where] every time someone suggests a new tax they have to pay tax.”
The Welsh government will consider a shortlist of ideas in the autumn. From there, the proposals will be put forward to the National Assembly, UK government and both the House of Commons and Lords.
What do you think? Is it a good idea that devolved governments are using tax to inspire social change, or will this create more work for the Office of Tax Simplification?
About Richard Hattersley
Richard is AccountingWEB's Practice Editor. If you have any comments or suggestions for us get in touch.