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Devolution of tax powers will be key to supporting public services in Wales in the future, said Mark Drakeford as he outlined his vision for fiscal devolution.

First published:
5 July 2016
Last updated:

This was published under the 2016 to 2021 administration of the Welsh Government

From 2018, Wales will raise its own money to spend on public services for the first time in almost 800 years when stamp duty land tax and landfill tax are devolved.  

As part of the Welsh Government’s legislative programme for the year ahead, two Bills – Land Transaction Tax (LTT) and Landfill Disposals Tax (LDT) – will be introduced to realise the full potential of these devolved taxes.
In his first statement to the National Assembly about fiscal devolution, the Cabinet Secretary will set out the next steps in the devolution of tax powers. These include:
  • Publishing a draft of the Land Transaction Tax and Anti-avoidance of Devolved Taxes Bill ahead of its introduction in the autumn;
  • Early publication of a technical consultation about the additional rate on second homes for Land Transaction Tax, as part of a commitment to wide engagement about key policy areas for both Land Transaction Tax and Landfill Disposals Tax over the coming months;
  • Leading negotiations with the UK Treasury to deliver a fair fiscal framework for Wales; 
  • Taking forward the establishment of the Welsh Revenue Authority, including the appointment of a chair over the coming months.

Mark Drakeford will say:

“When stamp duty land tax and landfill tax are devolved to Wales in 2018, the Welsh Government will raise its own money to spend on public services for the first time in almost 800 years.  
“This marks an important step in our devolution journey and a significant change in the way our public services are funded.
“A huge amount of work is already underway to prepare for these tax powers.  Welsh taxes will be fair, as simple as possible, provide stability and certainty to taxpayers and support jobs and growth.  Our proposals are designed to improve efficiency and effectiveness and most importantly reflect Welsh needs and priorities.”

The devolution of tax powers means there will be an equivalent reduction in the Welsh block grant and the Cabinet Secretary will highlight the importance of securing a fair fiscal framework for Wales.  
He will say: 

“I am already negotiating with the Chief Secretary to the Treasury on a fiscal framework to ensure Wales does not lose out.
“I will also be seeking detailed clarification about the operation of a funding floor – a matter which is raised regularly by Members across the Assembly Chamber.  A sensible fiscal framework will pave the way to the introduction of Welsh rates of income tax – a decision that should continue to rest with the National Assembly.
“The devolution of taxes will provide Wales with the opportunity to take a more rounded, integrated, and long-term view of its finances. “It will provide an opportunity to involve people in decisions about the levels and extent of raising revenue and about the decisions about how that money is spent.”