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Wales Tax Powers Confirmed In Westminister

by Amanda Banks,, London

12 December 2014

British Members of Parliament (MPs) have confirmed that new tax powers for Wales will include the freedom to set different rates of personal income tax for each tax band.

The measure was included as an amendment to the Wales Bill, which has now cleared its final parliamentary stages in the House of Commons. The powers will allow the territory to introduce a differential of up to 10 pence in the pound in income tax rates, compared with UK rates. Its three income tax rates would no longer need to move in tandem, under the so-called "lockstep" restriction.

Under the lockstep, the basic, higher, and additional income tax rates would only have been able to be changed by the same number of pence in the pound. So if the Welsh Government wanted to increase the basic rate by 1p then the other two rates would also have to be increased by 1p leading to a tax structure of a basic rate of 21 percent, a higher rate of 41 percent, and an additional rate of 46 percent, compared with the 20, 40, and 45 percent rates in place in the UK.

The Bill also devolves landfill tax, stamp duty, and land tax, and there will be a pro-rata reduction in the Block Grant provided by the UK (budgetary provision). The Bill will also give Wales the power to decide whether 16- and 17-year-olds should have the right to vote in the income tax referendum.

Stephen Crabb, the Government's Welsh Secretary, said that the Bill's passage is "a significant step forward on the path towards a lasting devolution settlement for Wales, making the Assembly more accountable and providing Welsh Government with the tools necessary to grow the Welsh economy."

The Bill is expected to receive Royal Assent before the end of the year.

TAGS: tax | law | United Kingdom | legislation | tax rates | stamp duty | tax reform | individual income tax

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