Opinion Former Article

Cautious approach to income tax changes in Wales welcomed

Commenting on today’s Welsh Assembly vote to approve the Welsh Budget for 2019/20, Ritchie Tout, Vice-chair of the CIOT’s Welsh Taxes Technical Committee, said:

“We welcome the sensible decision to avoid changing the income tax rates in Wales. It is best to let the system of identifying Welsh taxpayers settle in for at least a year before giving any cause for further confusion among taxpayers by changing rates or bands.

“Changes to the income tax structure for high earners or businesses carry a significant risk that decisions on where to locate will be based on tax. This is a threat to Wales with our long and well populated border with England. The potential consequences, if the tax rates are increased, could be a reduction in the tax base due to migration or a large dead weight cost with no guarantee that it will be offset by an increase in the tax base if the rates are reduced. The dilemma illustrates neatly the challenge that will face the Welsh Government in balancing the desire to use their tax-raising powers to invest in public services with seeking to protect the country’s revenue base.

“Today the Welsh Budget process looks primarily at expenditure whereas what will be needed in the future is a focus on the detailed technical issues and on revenue raising. This would be better dealt with in a Finance Bill process that scrutinises detailed technical changes. It would, in particular, provide an opportunity to make wider changes to the existing tax legislation than could be dealt with by regulations. A Finance Bill will be an opportunity to debate innovative new strategies for Wales.”

Notes for editors

1. The Welsh Budget 2019/2020 was agreed after a debate and vote in the Welsh Assembly today (15 January 2019)

2. The Chartered Institute of Taxation (CIOT)

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.
Contact: Hamant Verma, External Relations Officer, 0207 340 2702 HVerma@ciot.org.uk

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