The government has announced that they will give serious consideration to a report calling for Wales to have its own tax system. Many believe that a referendum should be held to decide whether allowing the Welsh government to vary income tax is the best option for the Welsh people.
Welsh Secretary David Jones said work would begin straight away to decide which of the report’s proposals may be introduced.
David Jones was asked if it was part of a “slippery slope” towards ever greater devolution.
He commented, “I don’t think it can be suggested that there is anything that has been sprung upon the Welsh people. They were always aware that this was part of the process.”
He praised a “very thorough piece of work” from the all-party Silk Commission.
“It’s a powerful piece of work which we will be giving very careful scrutiny to.”
First Minister Carwyn Jones stated that income tax devolution must be accompanied by reform of the block grant. Carwyn Jones believes that the Welsh government is underfunded by the Barnett formula which the Treasury uses to work out the size of the grant.
Carwyn Jones said, “If you look at income tax-varying powers, there is a trap there because at the moment we know that Wales is underfunded.”
“If we were to take income tax varying powers now it would be on the basis of that underfunding. It would lock the underfunding into the system forever.”
The commission’s Labour member Sue Essex, a former Welsh finance minister commented, “This is not a pie in the sky thing we are talking about. It’s possible, it’s doable in Wales.”
Shadow Welsh secretary Owen Smith added, “In assessing those recommendations, we will need to test not only whether the proposals are in the financial interest of the Welsh people but also whether they pass the test of enabling an equitable and sustainable financial settlement for the whole of the UK.”
Many people are happy about the potential change and believe it is a positive change for wales. Nick Bourne, the former leader of the Conservatives described the change, “It’s good for Wales, it’s good for the United Kingdom. Why wouldn’t they be comfortable with this?”
However many critics fear that the change would make the taxation system more complicated than it already is. Director of the Institute of Chartered Accountants in England and Wales David Lermon said, “We are more cautious about the recommendations relating to the partial devolution of income tax.”
“They will inevitably introduce greater complexity and bureaucracy into the UK tax system, two qualities that the tax system already has in abundance.”Share