CLA Wales cautiously welcomes the Silk Commission report

10 November 2013

Rural proofing will be crucial when power shifts from London to Cardiff and we have to give careful consideration as to how this will impact on rural Wales.

CLA Wales Director Ben Underwood comments:  "Although the changes recommended in the Silk Commission report released this week would make the Welsh government responsible for raising around a quarter of its own budget, giving Wales more say over its destiny, we must make sure that rural businesses are high on the agenda."

Since 1999, most of the devolved administration's budget has come in an annual block grant from the Treasury, currently worth more than £15bn

Paul Silk makes 33 recommendations in the report with the main one being the shared responsibility of income tax between Westminster and the Welsh Government. An aggregate levy (a £2-a-tonne tax on quarrying) stamp duty, air passenger duty and landfill tax are all proposed to be devolved, and the Welsh government should have sole responsibility for business rates states the report, leaving corporation tax, national insurance, capital gains tax, VAT and fuel duty the responsibility of Westminster.

"We support the intention for Wales to be made accountable for its funds. Wales will be able to decide its tax levels without any limits giving it the power to decide what is important to the people of Wales. Accountability has therefore got to be key in the success of this proposal," says Mr Underwood.

"It's not a case of just being given pocket money anymore. This is like earning a salary."

"The recommendation for Wales to be able to raise levy funding in order to change cultural behaviour based on lifestyle choices could even out reduced income tax raised with possible lower rates than across the border," explains Mr Underwood, referring to the plastic bag scheme in Wales which is an example of an effective levy in Wales which is about lifestyle choices.

"There will be a need to rural-proof these potential levies as a favourite target could be the ownership of a 4X4 vehiclewhich is a key requirement of working in rural areas and not a luxury as may be perceived by urban dwellers. This is the kind of example that we must push forward," adds Mr Underwood.

"We also welcome the fact that Welsh Government will have the ability to borrow money  as Local Authorities do now. This will enable WG to borrow money on infrastructure projects of a national scale which is not possible at present.

Mr Silk and his colleagues have laid out a timetable to move from where we are now to tax-varying powers by 2020 - the people of Wales will be given the chance to vote for Welsh powers to alter income tax in a referendum.

That referendum can only be triggered by a two-thirds majority vote in the Assembly as well as the backing of both Houses of Parliament. Similar arrangements existed for last year's referendum on the Assembly's law-making powers.