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Hand Wales control over its taxes, says commission

Silk Commission outlines handover of tax-setting responsibilities and borrowing control to Welsh government

20 Nov 2012 Accountancy Age

By Kevin Reed

national-assembly-wales

WALES SHOULD HAVE more control over setting its own taxes, according to the commission charged with looking at devolution issues.

The Silk Commission has suggested that a range of levies, including income tax, could be handed to the Welsh government to set – a move it says "would empower the Welsh electorate and government, increase responsibility and strengthen Wales and thus the United Kingdom".

Incremental steps could be taken towards handing over tax-setting responsibilities. Landfill, stamp duty and air passenger duty rates could be among the first taxes set by the Welsh government.

Responsibility for income tax could be shared between the Welsh government and Westminster, which would see a portion of the tax rate under Welsh control within its borders.

Both governments would have to agree on resolving any funding issues that would arise prior to power being handed over, and would require a Welsh referendum.

Devolution would also see a reduction in the grant handed to Wales from Westminster.

The commission's chairman Paul Silk said: "Our package of recommendations meets the test of our Terms of Reference: to come up with recommendations which improve financial accountability, are consistent with the UK's fiscal objectives and command a wide degree of support.

"What we are recommending is significant and historic. It will give Wales its own tax and borrowing system for the first time. The commission is delighted to present our agreed report to the UK government and we hope for speedy implementation."

Under the proposals, corporation tax would not be devolved unless that responsibility is also granted to Scotland and Northern Ireland.

Greater flexibility in borrowing is also recommended by the commission.

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