With so much political drama surrounding the Senedd in recent months, and the constant fighting over Brexit, it is easy to forget some of the mechanical aspects of legislating that were perhaps expected to characterise this Assembly. Chief amongst these are the powers of taxation reached by negotiation between the governments at both ends of the M4.
The first phase in enacting this process was relatively straight forward and we now have a separate regime in Wales relating to both stamp duty or land taxation, and also landfill in Wales. Of course these are relatively small taxes, but they represented a cementing of that new competence. More tricky is the next phase – the introduction of a new and Wales specific tax. Mark Drakeford AM as Finance Secretary floated four potential taxes last autumn and this week gave an indication of the choice around which one is to proceed. The choice is a land banking tax levied on those who do not use their powers to build on land designated for planning. Heavily influenced by a similar tax in the Republic of Ireland, it is intended to be behaviour changing rather than revenue raising. The next stage is to negotiate with Westminster on the principle of the tax – a process called TaxCO in reference to the disbanded LCO (Legislative Competence Order) process – and this phase will now commence. If the negotiations are fruitful, the new tax will be shaped for introduction later this year.
Interestingly, though, the three other options will continue to be measured for introduction in different ways. On the matter of a potential plastics tax, the Welsh Government will be negotiating with the UK Government around its own potential tax in this respect. The mooted social care levy will be examined in more detail through a working group chaired by Huw Irranca-Davies AM. Meanwhile the tourism tax idea will be pushed into the long grass of local government to decide on its potential introduction. The Conservatives are claiming, with some justification, a victory in opposing the latter; which stands in stark contrast to Plaid’s disappointment at not securing the Wales-only plastics tax. Perhaps this is the first sign that Plaid leaving the compact with Labour in the autumn has indeed meant they do are less significant in their impact and influence.
Of course, all of this is nothing compared to the potential impact of the use of income tax powers in Wales. Even though the day of their introduction is some way off – and Labour have pledged not to vary the rates in the life of this Assembly – this is the bigger step on the taxation journey.