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Income tax changes on track but Assembly committee concerned not enough people know

28/03/2019

​The way income tax is set in Wales will change at the beginning of next month, but not enough people know about it, according to the National Assembly's Finance Committee.

Under the Wales Act 2014 the UK Government have reduced Income Tax for Welsh Tax payers, allowing the Welsh Government to set Welsh Rates of Income Tax, meaning, some of the revenue raised through income tax will go directly to the Welsh Government.

An online poll conducted by the Finance Committee found that almost a third of people who responded didn't know about the changes which come into effect on 6 April.

The Welsh Government has a public awareness campaign in place but the Committee remains concerned that this message is not being heard by some Welsh tax payers.

"The last year has seen significant progress on fiscal devolution in Wales, and we feel it is important to recognise that the process has largely been positive," said Llŷr Gruffydd AM, Chair of the Finance Committee.

"We particularly recognise the effective establishment of the Welsh Revenue Authority as a key factor in this success.

"The introduction of the Welsh Rates of Income Tax represents a significant increase in the portion of taxes paid by Welsh taxpayers which are decided in Wales.

"But we are concerned by the evidence, including constituency feedback and the Committee's own indicative poll, which suggested a disappointingly high proportion of the population were as-yet unaware of the impending implementation of Welsh rates of income tax."

The Committee was also disappointed the Secretary of State for Wales, the Right Honourable Alun Cairns MP, refused give evidence to the inquiry.  The collection of income tax remains to be the responsibility of the UK yet Mr Cairns wrote to the Committee to say:

"It is my belief that it's appropriate that your committee formally scrutinises the Cabinet Secretary for Finance and Local Government [sic] in relation to these matters given the respective lines of accountability."

Mr Gruffydd AM said:

"The Committee is disappointed with the Secretary of State for his continual lack of engagement with the Committee on this subject. 

"The Secretary of State said accountability lies with the Welsh Government.  However, Income Tax remains a UK tax (albeit with Welsh rates), therefore, it is appropriate for the Secretary of State to answer questions on the implementation process.The Secretary of State offered to meet each Committee Member individually, but we believe the process of scrutiny needs to be open and transparent. ."

The Committee makes four recommendations in its report:

  • The Committee recommends annual updates are provided from the WRA Board in respect of their workforce planning and the steps being taken to retain knowledge and experience within the organisation.  The Committee would welcome these annual updates until the appointment of a permanent Chief Executive;
  • The Committee recommends the Welsh Government provides an update on the final costs to disapply Stamp Duty Land Tax and its associated costs in Wales;
  • The Committee recommends the Minister provides an update to the Committee on the formal evaluation of the communications activity which have taken place ahead of the implementation of the Welsh Rates of Income Tax; and,
  • The Committee recommends the Minister provides an update on the costs of the implementation of the Welsh Rates of Income Tax, including an update on implementation and confirmation of the HMRC annual operation costs charge.

The report will now be considered by the Welsh Government.

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