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UK Government Confirms Tax Devolution For Wales

UK Prime Minister David Cameron has confirmed that the Government intends to devolve the power to set Landfill Tax and Stamp Duty rates in Wales, and to hold a referendum on devolving the income tax rate. Cameron made the announcement during a press conference at the Senedd, the National Assembly for Wales.

Under the moves, ministers in Wales will also be able to borrow funds, and Cameron observed that Wales would now be able to undertake projects such as upgrading motorway links and building 'much needed' affordable homes.

However, Wales' First Minister Carwyn Jones subsequently told the BBC it was 'not yet' the time to trigger an income tax referendum. He explained that there is a shortfall of GBP300m in the amount of block grant that Wales receives from Westminster, and that this had to be addressed first.

Asked about raising the Stamp Duty threshold, Jones said that the Welsh Government would talk to the construction industry and to mortgage lenders to see what the appropriate scale should be. He observed that currently, the same scale was applied in central London as in the valleys of Wales, and that this 'doesn't make sense.'

He added that he did not think the powers would be devolved until 2015 'at the very earliest.'

Meanwhile, the Government has also indicated that its full response to the Silk Commission on Devolution in Wales will be published before the end of the year. Welsh Secretary David Jones told the Welsh Affairs Select Committee back in July that the Government's response would be published 'very soon' and hopefully 'in the next few weeks,' following complaints that the Government had failed to meet to a commitment to publish during Spring 2013.

The Silk Commission Report recommends that tax devolution should proceed from Landfill Tax and Stamp Duty to the aggregates levy and to business rates. Also, Air Passenger Duty for long-haul flights should be introduced, to be followed by full devolution of the duty if possible. However, the Commission ruled out devolving Corporation Tax.

 

 

For further information please contact Ian Cocks, international contact partner for our firm in the United Kingdom on

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