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Plaid Cymru publishes Silk Commission proposals for improving Nation’s economic performance

09/02/2022

Responsibility over financial powers would ‘shift the mindset of Welsh government to jobs and the economy’

Plaid Cymru has today published its submission to the Commission on Devolution in Wales, also known as the Silk Commission. In it, the party has called for the transfer of responsibility over a number important areas in order to give the Assembly and Welsh Government the tools to strengthen our economy.

Download Plaid's Silk Commission submission [pdf]The first part of the independent Commission, currently underway, will review the case for the devolution of fiscal powers to the National Assembly for Wales and recommend a package of powers that would improve the financial accountability of the Assembly.

Plaid Cymru’s proposals outline how significant powers and tax revenues should be transferred to the Welsh Government including a significant proportion of income tax, VAT and corporation tax as well as powers over other taxes including resource taxes.

This would transfer not only the necessary fiscal powers, but also the responsibility to improve our nation’s economic performance, to the Welsh Government and the National Assembly. Plaid say that it would lead to a “shift of mindset in the Welsh government and the National Assembly for Wales to focus more on the economy.”

This process to ensure greater financial powers and responsibility would happen alongside the inter-governmental discussions to replace the Barnett formula with a new needs base formula for the nations of the UK.

Plaid Cymru’s submission to the Silk Commission includes;

1. Income tax: Each UK income tax rate applicable in Wales should be shared between the UK and Welsh government, with at least half coming to the Welsh Government. Revenue associated with the balance would be retained by the UK Government. The Welsh Government should then have the power to set Welsh income tax rates without restriction.

2. VAT: At least half the imputed VAT revenues in Wales should be transferred to the Welsh Government.

3. Corporation tax: All corporation tax revenues should be transferred, as should the power to set rates.

4. Resource taxes: Wales should have the power to create and levy new taxes on all aspects of resource exploitation, including water and renewable energy.

5. New Taxes: The Welsh Government should have powers to introduce and levy new taxes, except where taxes are specifically reserved to Westminster.

6. The Crown Estates: Given that, in the past, Wales has not fully benefited from its abundant energy resources, ownership of and control over the Crown Estates in Wales should be transferred to the Welsh Government.

7. Borrowing powers: The Welsh government to be given significant borrowing powers in order to invest in infrastructure and create more jobs.

8. Improved transparency: A system should be put in place which improves the transparency of public expenditure in Wales and provides a clearer picture of the taxes collected in Wales.

Commenting on the publication of its submission, Plaid Cymru Leader, Ieuan Wyn Jones said;

“The Welsh government is unique in that it has substantial legislative powers, a £15 bn Budget and yet no responsibility over raising income. Community councils, local authorities, UK Government and nearly all sub–central governments within the Organisation for Economic Co-operation and Development (OECD) member states have powers to raise income but not the Welsh government.

“Having powers to raise income would incentivise the Welsh government to improve the Welsh economy and get more people into work because the Welsh government would then be able to increase its income. This Welsh Government has no direct financial interest in the economic well-being of Wales, but by giving it these powers it would give it the incentive to strengthen the economy – it would have the tools to focus on economic growth and create more jobs and better paid jobs that would increase the tax base.

“This would shift the mindset of the Welsh government and the National Assembly for Wales to focus
more on the economy.

“Surely we would prefer to have these decisions taken closer to the people of Wales by the Welsh Government and the National Assembly rather than by a remote government in Westminster which doesn't place the economic well-being of our nation as a top priority.

“This is not a decision about raising or lowering taxes. That is a matter for the government of Wales of the day. This is about giving the Assembly the tools to strengthen the Welsh economy and we urge all others interested in improving our nation’s economy to back our Silk Commission proposals.”

Plaid Cymru economic adviser, Madoc Batcup added:

“These powers would allow the Welsh Government to tailor the taxation system in a way which meets its priorities and more importantly the needs of the people and communities of Wales. For example, having powers over Corporation Tax would allow the Welsh government to create a better environment for businesses to thrive which in turn would create jobs and increase income from taxes.

“Borrowing powers are also critical if we are to secure capital investment – to provide better infrastructure and more jobs in the Welsh economy.”