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Nation•Cymru A news service by the people of Wales, for the people of Wales.

Opinion

Wales needs control of taxes so that we can forge our own economic future

By NationCymru
Steffan Lewis AM. Picture by National Assembly (CC BY 2.0)

Steffan Lewis, Plaid Cymru AM for South Wales East

The government has published the first ever rates for the Land Transactions Tax, the replacement for Stamp Duty which is the tax on buying homes.

I am reliably informed that these are first distinct taxes to be levied by a Welsh administration since the Statute of Rhuddlan. And they are totally different to the rates that have been proposed for England.

This is a fundamental change, with Welsh people having no living memory of paying different national taxes to England.

Wales, England and Scotland are increasingly moving in different directions when it comes to public finance.

While the march of Brexit suggests a Westminster power-grab (and this prospect is completely real), the flow of powers before the EU referendum was in the other direction, albeit at a very slow pace.

As a Welsh nationalist, I welcome this policy divergence from England.

For once, we can imagine people living here to be Welsh taxpayers and Welsh citizens, and paying different taxes to our neighbours is an important step in deepening that relationship.

Independence

Plaid Cymru has long advocated that Wales should set distinct and better tax policies than England.

For what it’s worth, my analysis is that the proposed rates by the government are more suited to the Welsh housing market than the equivalent rates that are being endorsed at Westminster.

I believe there is scope for more action on second homes, but Labour and the Conservatives have usually been reluctant to agree, so this may have to wait for a Plaid Cymru government.

However, my challenge to the Labour Government is that if decisions on Stamp Duty are better made in Wales, then why not other economic decisions as well?

Independence is the only way to have a truly complete set of economic and fiscal levers in Wales.

But tax devolution is already happening, and is a normal development. Countries whose governments want independence, namely Scotland, Catalonia and Flanders, already have substantial tax devolution and have used that devolution to shape their own economies, ahead of independence being attained.

There is no particular contradiction between the two, and the point is that a looser and less powerful British state means a stronger, more confident Wales.

So if the Labour Government accepts that taxes on property should be made in Wales, why not Corporation Tax too? Why not VAT?

Why not keep even more of the £18bn we generate here in Wales? Do they honestly think the Tories could do a better job?

My position is clear. Tax policy should be set, controlled and decided for Wales, by Wales, as a matter of principle, no matter who is in power.

Our national story is one of small steps, because the unionist parties have for so long conspired to stop us from taking giant leaps.

But Plaid Cymru can and will grasp these new opportunities to forge a future for the nation which is decided by ourselves, not dictated to us from London.

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14 comments

Red Dragon Jim

Fantastic article and wish Steffan Lewis all the best with his recovery.

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j. humphreys.

With the current tax wars going on everywhere, this is a chance to move forward. Business on board, with temptation? Good stuff,

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Graham John Hathaway

The issues of tax and spent lie at the heart of any Government and just how it plays out in terms of polices and competence, What a delight to witness a piece of tax history in the life of Wales if only a marginal amount of discretion. Sufficient for Steffan to see potential for making a difference to our lives, but fully taken advantage of, albeit slowly. It raises the tantalising prospects of further devolution of fiscal matters but I feel these will be highly protected by Westminster. That is the irony of the drip feed of powers. It's always tokenism, and heavily predicated. The real powers have yet to be released. Indeed in some instances a claw back of powers by stealth, with the looming Brexit bills that will take no regard of Welsh interests, or the other Celtic Countries. This is a travesty and will bounce us into another round of hand wringing and the potential of lost ground and with it confidence. As Steffan has alluded to. What if we were given responsibility of all receipts and income. VAT and Corpration tax. Those receipts already generated by Welsh business. I hear already say, but it remains insufficient to cover out goings. Of course in the early years there has to be, but it doesn't need to remain so. There are accounting issues long standing that come into make a play, particularly in those years when Wales exported its wealth without investment hitherto at the time of prosperity. We are owed, in the same way there's a divorce bill needing paying in the EU withdrawal bill. I stand to see greater understanding of our rights to self manage of financial affairs set against the unique and powerful natural resources, water and land that belongs to Wales.

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Muddy Valley

Hi Graham, the idea that we are owed some sort of repayment for the export of wealth both excites and intrigues me. How much is the amount and from whom would the repayment be made? Would it need to be shared with other geographical areas exploited in, arguably, the same way such as Lancashire and Yorkshire? Would the benefits be targeted to the industrial areas of the south from where mostly the industrial wealth was extracted or shared across the whole nation? A wonderful pandora's box of speculation to explore!

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Graham John Hathaway

Hello Muddy Valley, without a long saga of mis management of the renewal of old industrial areas of the likes you have mentioned, and others, simply put we are owed. It seems this is, to be fair, a symptom of decline that other countries face just to mention the old industrial rust belts of the USA. An indisputable fact is the characteristic of neglect that remains and the dire consequences of life in decline. Political, economic and social. Always affecting the more vulnerable in society. The differences will split when the areas you mention are not seeking independence, not in the same way that Wales and Scotland as Countries are doing so. At least a % of us are. Much less in Wales. There has been a woeful lack of attention to the root causes and solutions to lift these areas into improved prosperity. In terms of investment, then I live in the old coal mining area of sWales. We badly need investment in our transport infrastructure. To be specific, a Metro style railway system across the valleys and in particular the Cynon. Where I live. The A470 main artery road is a daily, ugly , crammed journey by road each morning. Pressures of getting to employment in other areas depend on it. Since there is little choice. Given the natural resources of Wales and in particular, it's water is the very essence of abuse by default. Wales must wake up. It needs serious investment over a prolonged period, in order just to stand still. Fundamental is the proposal of Steffan is to at least seek acknowledgement of the incomes from Wales through its current taxation modes. Many don't realise just how much we contribute from our coffers that we would like returned. The current financial figures are as I understand it, in a mix with England and are unavailable. Not in a useful form. Until these issues are made know in easy to read format, since I know the Wales Governance Centre is charged with this analysis , then the sooner we as a Nation, can look in the mirror, without the constant description of Wales as the poor man of Europe, is a travesty. Since say it long enough and loud enough then you begin to believe it. As for the analysis of what's owed from our industrial past, then buried somewhere are detailed recorded of tonnage of coal etc shipped out of Wales as well as its productivity. My reading that up to the mid 1960s Wales was a net contributor to UK finances. But never saw its prosperity realised within its boundaries. It's about time the Dragon started to breathe its fire, on the unbending attitude to recognise Wales as a big contributor of natural resources and what it had contributed for a century. For now all we see is the HS2 investment and little to Wales. It's all England again.

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Edeyrn

You are right Muddy valley.....Wales is suffering the legacy of being a colonised mess.....where its men and women of prominence and status refused to speak out or up for the very communities exploited

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credyd

While we remain locked into a dysfunctional and destructive monetary system based on a Ponzi scheme of ever mounting IOU's (digital "Sterling pounds" representing 97.2% of our entire money supply), considerations of tax alterations mount to little more than moving the deck chairs on the Titanic. That is no exaggeration. Given that exponentially growing debt levels now far exceed the the amount of pounds, euros and dollars even in existence, a Black Hole of global economic destruction is on its way. Consider the 2007-8 financial glitch just a signpost pointing to the approaching Debt Tsunami. Fiddling with taxes in Wales will do nothing to protect us. "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning" - Henry Ford The sad truth is that our elected representatives don't understand the monetary system and how it works either. A poll taken this year of MP's found that over 80% of them didn't even know where money comes from, let alone how it works. They thought they did of course, but were wrong. The same is probably true of our AMs, including Steffan the author of this article. "Permit me to issue and control the money of a nation, and I care not who makes the laws." -Mayer Anselm Rothschild, Banker It is the Financial hub of the City of London, also known as The Square Mile, that is the real master of our world, including the Westminster government. Financial deregulation in the 1980s, extended by New Labour in the naughties, have only exasperated an already deteriorating state of affairs. Deteriorating for the real producers of wealth, the industrial economy that is, while lining the pockets of the parasitic wealth-extracting Financial economy. This explains why UK economic growth is largely down to growth in the Financial sector. As the Financial sector grows, the real economy must shrink, and poverty in Wales increases. If the Senedd is to provide any relief, Assembly members must being willing to learn how the system really works. They could start with this video: https://www.bitchute.com/video/Wl5KOo2buEEy/ They could then augment their library with some of the books listed here: http://wsc.wales/principles/social-credit-economcs/monetary-reform/ Unless our "elected representatives" come to an understanding of the system that is keeping our nation in debt-servitude and poverty, they have no effective solutions to offer. Once they do understand the system, one can only hope they find the courage to discuss some simple but effective solutions - such as a Welsh National Bank that supplies the Welsh economy with a stable debt-free money supply. Only then could we consider effective changes to the tax regime - such as removing taxes on economic producers (income tax) and consumers (VAT) and placing them on economic extractors (the Financial sector). Westminster has been thoroughly captured and compromised by the Financial sector since the creation of the Bank of England in 1695. That institution is beyond hope. The Welsh Assembly, however, is relatively new and uncontaminated enough to establish a Welsh economy on sound monetary principles. It could propel Wales into an economic dynamo that shines the way in a global morass on debt-bogged darkness and increasing inequality. If Steffan and his colleagues are unwilling to do it, there will come others who will and replace them. We are tired of waiting.

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Graham John Hathaway

At last at least a glimpse of the reality of the square mile and the root causes of the 2008 banking crash. I thought it most revealing, thank you . It was a banking failure of casino style behaviour and the efforts to curb this but aided by a lack of controls that was international. Are we not still floundering. It looks like. If you seek to grab a tiger by its tail it's often the case you will get bitten. In fairness to Plaid Cymru, and Adam Price, has he not flagged up and urged the setting up of the very thing, Credyd, that you advocate. A Welsh National Bank, with a lending capacity directed at small and medium size businesses. What ever happened to Julian Hodge and the bank I saw in St Mary Street Cardiff many decades ago. But the most damaging of your comments is the potential yet again for debt growing out of control, and a return to the same problems hiherto. The facts and feelings are similar. High debt levels that are sustaining the UK economy, well above its actual performance and productivity, ie ever more dependence on the shrinking Finance sector of London . And the lack of political skill in knowing how to solve it. Not a nice feeling over breakfast this morning.

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Geoff Horton-Jones

Totally agree Am not happy with taxes being set and then reset to zero as per Business Rates. Scottish income tax levels as set appear to offer a very wide range of options for both the people and their Government We desperately need to pay our own taxes into the Welsh Government and to have the vehicles to invest in our own future.

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Dafis

Get well soon Steffan, and then we'll go into the detail of what is needed. For any separate tax regime to mean anything we need to be entirely separated from the Whitehall/Westminster government.

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Josh

A separate tax regime implies a separate spending regime. To cover expenditure Wales would need higher taxes than England (or reduced expenditure). So, yes, details needed.

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Edeyrn

Wales spends a lot on things it doesnt need, but England asks for ...... high speed rail is one among many other vast costs

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In reply to Edeyrn

Graham John Hathaway

An interesting reflection on a central politico, as referenced by Westminster, where there has been political-economic and cultural ties within a Union, suggests the basis of mutual benefits. It cannot be equal or demonstrated that it is anywhere near to a consensus of behaviours, relationships and outcomes. Just look at each category of economics, cultural and social influences. Did Wales vote for costly wars, for spend on arms of destruction, Trident, or HS2, or has any serious influence on the way Brexit will unfold. And how much has all this costed Wales and what percentage of our receipts intoTreasury coffers has been allocated to unseen causes not of our benefit. Did we vote to give the DUP such a largresse for propping up an unstable Government. To the divorce settlement with the EU running at £40b or so. Not in my name. Or many of my compatriots. This is terrifyingly one sided, corrupt and injurious to remain in the Union so one sided. For the financial sector based in London that presided over the 2008 financial crash that is still playing out. It's as one sided as any in fields of play, and will always be so. This isn't partisanship or pipe dreaming, but a serious dislocation between what Wales gets out of this Union and how others profit from it by weight of votes and power. And what of the so called powerhouses of wealth generation. Namely London and its financial institutions yet to convince anybody that it works in the interests of the U.K. In short as corrupt as any institution that seeks to make money in a game of chance and speculation. When will we learn.

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Jonathan Edwards Sir Benfro

Typical of the leading members of Plaid. Nearly get to where we need to be. But still falls short. "Plaid Cymru can and will grasp these new opportunities to forge a future for the nation" What opportunities? I know that the powers are on the books. But where are the moves actually to use them? Plaid's job is to create these opportunities, because they have no real existence when neither Labour not the Conservatives are making any significant moves. Plaid has to make things happen. Plaid has to break up the status quo. One way to do this is to create a movement of 30-40-50% of Welsh people so there is a mandate for actually taking these "opportunities". Plaid on 10-12-15% has no mandate or opportunity at all. Steffan Lewis - what is the plan to move from being a minority to a majority please? You are definitely one of the smarter Plaid AMs. Please devise - and state - your plan for how you are going to do this.

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While we remain locked into a dysfunctional and destructive monetary system based on a Ponzi scheme of ever mounting IOU's (digital "Sterling pounds" representing 97.2% of our entire money supply), considerations of tax alterations mount to...

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