A Welsh Conservative Assembly Debate closed by Shadow Minister for Communities and Local Government, Mark Isherwood AM, has resulted in the Welsh Labour Government committing to not raise the Welsh Rate of Income Tax for the remainder of the Fifth Assembly.
The Welsh Labour 2016 manifesto promised not to change tax rates on the now-devolved portion of income tax before the next assembly election in 2021.
However, in October last year, then-Finance Minister Mark Drakeford said he “will not move away from our manifesto commitment unless I'm compelled to do so, but I don't rule out the possibility that circumstances could change in a way that do have that compelling impact.”
Concluding yesterday’s debate which called on the Welsh Government to rule out a rise, Mr Isherwood emphasised the need for fair and reasonable taxation that “allows us to invest and reflects our ambitions” and urged the Welsh Government to listen to the warning by the CBI that “raising Welsh income tax should be a last resort, not a first response”.
He said:
“Let us remember that, since 2010, Chancellors at UK level have got more tax out of the rich than any of their predecessors. Let us remember that 58 per cent of tax across the UK is paid by the top earning 10 per cent of taxpayers. In Wales, the top 10 per cent are only contributing 44 per cent because there's so far fewer of them. Let us remember the research in 2016 by Cardiff Business School, which said that reducing the higher rate of income tax in Wales would raise additional revenue by attracting high earners. Let us remember that the Welsh Government itself has admitted that the most it would be able to get out of income tax would be to charge basic rate taxpayers, and the warning by the CBI that raising Welsh income tax should be a last resort, not a first response.”
Mr Isherwood welcomed the fact that the Welsh Government would be backing the motion and noted that Plaid Cymru would not.
