MPs debate Wales tax powers

MPs get their first chance to debate proposals which would see some tax-raising powers, including part of the income tax system, transferred to the Welsh Government

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  1. Adrian Masters

Welsh taxes: what we've learned

There have been very clear signs today that control over some taxes will be transferred to Wales and sooner rather than later. But there were some other signposts to the next steps in the devolution of financial powers in today's meeting of the Welsh Grand committee that are worth noting:

  • It seems pretty much a given that the minor taxes will be devolved to Wales in the near future. The powers could be added to the next Finance Bill and if not, Labour and Plaid are planning to force the issue with amendments.
  • Borrowing powers should follow hot on the heels of minor taxes because those taxes are widely understood to be the 'income stream' the Treasury is insisting on.
  • Welsh debt will be British debt. In the event a future Welsh Government with borrowing powers defaults, the UK Government would be liable.
  • Income tax devolution seems further away. The Silk Commission imposes a triple-lock before it happens: funding reform, administrative devolution and a referendum. Today it's clear Labour is adding a fourth test: 'certainty' that Wales would be better-off if income tax were devolved.

Labour remains highly sceptical about the whole process, with MPs questioning the motives behind launching the Silk Commission in the first place and making explicit their suspicion that it's designed as a 'backdoor' way of cutting funding to Wales.

We also learned that, while Treasury and Wales Office officials have been talking about the Silk Commission recommendations for some time, negotiations between the Secretary of State for Wales and the Chief Secretary to the Treasury begin next week.

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