The Taxing Issue

First Minister Carwyn Jones stamped on any suggestion that the Assembly would gain tax-raising powers in the days leading up to the March 3 referendum on giving the institution new freedoms to make laws.

He again attempted to kick the notion into the longest available grass when he said another referendum would be needed before ministers in Cardiff Bay gained such a responsibility.

But the question of taxation is not going to go away. Politicians from across the spectrum are convinced the funding system for the Assembly needs to be overhauled – and this is almost certainly going to involve looking at taxes.

It is easy to see why anyone who believes Wales is underfunded through a crude formula will argue that a needs-based system is urgently required and that any suggestion that the Assembly should make up the shortfall by levying taxes on its citizens is punitive and unfair.

But somebody will have to talk about the taxation elephant sitting in the Senedd sooner or later. A funding system which directly links Welsh funding to English-driven expenditure will prove untenable as the priorities of Westminster and the Senedd diverge.

If a Labour-led Government is returned to the Assembly in May it is highly unlikely it will go on a mission to radically shrink the size of the state.

Similarly, there is no indication that the UK Government will seek to transform Britain into a Nordic-style social democracy, even once the public finances have recovered.

There could be pressure on the Assembly to embrace tax-varying powers by a Whitehall which has tired of demands for cash, but there may also be ambitious men and women in the Senedd who warm to the idea of seizing this lever of government.

They could come from the Left and make the case that Wales’ traditions of community solidarity means we are prepared to shoulder a greater share of taxation in return for better services. Or we could hear voices on the Right arguing that tax-cuts could help bring prosperity to parts of Wales that Objective One funding has failed to regenerate.

There is no guarantee that enthusiasm would be limited to the political class.
A poll conducted for the Western Mail last month found 54% of people wanted the Assembly to have the power to raise and lower taxes; just 34% were opposed.

AMs are elected on the basis of how their party promises to spend cash – not on how they raise it. We may not see Budget & Business minister Jane Hutt standing with a Chancellor’s red briefcase in the coming Assembly term but such a day may be edging closer as Welsh democracy ferments.

A Thursday column