The debate on tax and borrowing in Wales continues

A think tank has called for devolved powers over stamp duty for the Welsh Government and there are continuing calls for Cardiff to have borrowing powers.

A think tank in Wales has renewed its calls for the devolution to Cardiff Bay of powers over stamp duty.

Ahead of the closure next week of the UK Government’s consultation on devolving the tax, the  UK Changing Union project has argued that such a development would achieve the objective of Ministers in Whitehall to make the Welsh Assembly and Government more financially accountable. The project’s Chair, Professor Richard Wyn Jones has argued:

“UK Government ministers have time and time again called for the Wales’s devolved institutions to be made more financially accountable. Devolving Stamp Duty to Wales would help achieve exactly that.

“Indeed, it’s difficult to think of a tax that is more suitable for devolution than Stamp Duty. By its very nature, it’s a tax that does not lend itself to cross-border evasion. It’s readily understandable to the public. It also links directly to the Assembly’s current responsibilities.”

The recommendation for Stamp Duty to be devolved came initially within part one of the Silk Commission’s report into the financial powers held by Cardiff which the UK Government is as yet to respond to despite repeatedly promising it soon.

Meanwhile, a key adviser to the Welsh Government has warned that Whitehall is refusing to provide Cardiff with borrowing powers unless Cardiff gains powers over income tax which would need to be subject to a referendum.

Gerry Holtham, who in his report published in 2010 called for borrowing powers has told BBC Wales:

“The Treasury’s position up until now has been that it wants to concede borrowing powers only if and when Wales takes income tax powers.

“The Welsh government’s position is that we should have borrowing powers commensurate with our revenue, whatever tax we get that’s raising that revenue.

“These would be small taxes so the borrowing powers wouldn’t be that great, but still, that’s the principle.

“But the Treasury’s trying to hold out and saying that you only get borrowing powers when you get income tax.

“There’s an ongoing discussion as I understand it.”

Separately however, Holtham did say that a separate deal between Whitehall and Cardiff Bay was under discussion on funding an M4 relief road near Newport. He explained:

“The M4 is a separate issue, because quite apart from whether or not Wales gets continuing borrowing powers year after year, there is the possibility that the Treasury might allow it to borrow one-off in order to part-finance the M4.

“The discussion there is, can some of the road tolls that are currently levied on the bridges over the river Severn… be used to finance borrowing for the M4?

“I get the impression that the UK government is in favour of the M4 happening. It understands that Wales’ capital budgets are not big enough to do the M4 without some borrowing powers – it would just gobble up the whole of the capital budget and therefore they are receptive to doing something about that.

“My guess is therefore they will, if you like, dedicate some of the road tolls to financing borrowing for the M4. I guess that will happen.”

Commenting on the remarks, a spokesperson for the Welsh Government has said:

“The chief secretary to the Treasury in his statement on 12 July said that the Welsh government should have early access to borrowing powers in order to support a funding solution for the M4 improvement scheme in south Wales.

“This confirmed the position agreed in the joint statement on funding reform published last October.

“We are not aware of any change in the position of the UK Government in relation to early access to borrowing powers since that date.”

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