AMs urge Welsh Government not to increase income tax

The Welsh Government will take control over 10p in each £1 of tax at the start of the 2019-2020 financial year. This means it can decrease rates by up to 10p per £1, or put them up.

Rates will not change in April, and the Welsh Government had previously promised not to increase them until after the next Assembly Election in 2021. But, speaking before he was elected as first minister, Mark Drakeford suggested he may consider increasing rates if he was "compelled" to do so.

Speaking in the Assembly this week, Monmouth AM Nick Ramsay presented a motion calling on the Welsh Government not to increase rates.

Conservative candidate for Monmouth Nick Ramsay

Monmouth AM Nick Ramsay

Opening the debate, the Conservative AM said the Welsh Government should use its new powers to stimulate the economy, and putting rates up may hurt this.

He said: "How can we attract job creators, investors and entrepreneurs to Wales to set up new businesses, create new jobs and enrich our economy? Taxation can help us do all of this, but only if these new powers are used in the right way to attract support and nurture investment, rather than discouraging ambition and aspiration.

"Evidence shows that low-tax economies are more favourable to business start ups, attract job creators, and can actually increase revenue because you're encouraging greater economic activity."

Saying increasing rates could result in people, especially those paying higher rates of tax, leaving Wales for England, Mr Ramsay added: "If we want to be a more prosperous country, we need a taxation system that encourages wage growth.

"I don't apologise for wanting people in Wales to earn more, because if people earn more, there's a greater tax take and more money for public services."

Blaenau Gwent AM Alun Davies, who has previously said interest rates should be increased by 1p in every pound, with the extra money going to the Welsh NHS, said there was little point in having extra powers if they are not used.

Blaenau GwentAM Alun Davies

Blaenau Gwent AM Alun Davies

"I don't share the fetish for low taxation for low taxation's sake," he said.

"I believe that we should have fair and reasonable taxation - fair and reasonable taxation that allows us to invest in our people and in our country, a taxation system which reflect our values and our ambitions and our visions for Wales.

"If our ambition is only to persuade people who wish to save tax pounds to move here and pay less tax, what does that say to a child growing up in Blaenau Gwent? The country we want you to grow old in is only interested in reduced taxation. We're not interested in the services that will sustain you and sustain your family."

Speaking at the end of the debate, finance minister Rebecca Evans confirmed she had "no plans" to change income tax rates during the current Assembly term.

Finance minister Rebecca Evans

But, she added: "It would be naive, however, to say we will never change taxes in Wales.

"There may be circumstances in the future where there is a compelling case for for a progressive change in Welsh taxes to provide the funding needed to deliver public services people want."

AMs voted unanimously to back the motion.