Letter to the Editor on Income Tax changes (03/04/2019)

In April this year the Welsh rates of income tax come into force for people living in Wales – the first time the Welsh Government will collect income tax in Wales. From April 6 a 10p rate of income tax  collected in Wales will be passed to the Welsh Government to spend on essential public services like the NHS, education and social services.

 

It’s important to know that this doesn’t mean the amount of income tax you pay now will go up. In fact, the Welsh Labour Government has made a commitment not to raise the rates of income tax in Wales during this Assembly term.

 

It also doesn’t mean that people have to make any changes to the way they go about their lives. Everything will be done automatically and behind the scenes. We’ll continue to make payments as we earn (PAYE), or by filing a tax return over the course of the year with HMRC -Just like now. There will be no change to the way income tax is collected – HMRC will continue to collect income tax as a single payment. However, from April 6th 2019 – HMRC will send a portion of the income tax collected in Wales directly to the Welsh Government.

 

The idea behind this is to make the Welsh Government much more accountable for the money it spends.   Currently the Welsh Government receives about 92% of all the money it spends in the form of a grant from the UK Treasury.  After April, this will drop to about 79% with about £3 billion of taxes collected here in Wales funding the rest of the spending.

 

It will then be a matter of choice for a future Welsh Government to decide if it wants to cut the amount of income tax it receives, keep it the same, or increase it in order to fund public services.

 

This change to the way taxes are collected will appear quite small, and most of us probably won’t even notice that they’ve happened. It’s an important step in developing the role of the National Assembly and the Welsh Government though. We believe it will make for a more mature, and accountable Senedd in Cardiff Bay – and some lively conversations about the future of tax in Wales.

David Rees AM (Aberavon), Jeremy Miles AM (Neath), Mike Hedges AM (Swansea East), Julie James AM (Swansea West) & Rebecca Evans AM (Gower)