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Tax cuts for all

 

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“The two most senior Conservatives in Wales, David Jones and Andrew RT Davies, have today confirmed their commitment to a low-tax Welsh economy.” So there you have it two leading Conservatives agreeing with one another. Its only news in the context that it doesn’t happen too often.

But hold on, do they really agree.?

It was only last February that the leader of the Welsh Conservatives Andrew RT Davies announced his party’s policy on tax. It was that higher earners should get a temporary income tax cut. It was the party’s view that cutting the 40p tax rate – paid by around 120,000 people in Wales – would encourage enterprise.

A 1p cut in the 40p rate would cost between £12m and £16m a year. The rate was to apply to taxable earnings over £34,370 a year.

Speaking at the time Mr Davies said  “Tax is one of the most important levers that any government has at its disposal. And with income tax being the most important, its devolution as recommended by an independent commission is a real game changer. If some elements of income tax are devolved, it would in my view be necessary to look at a period of reduced taxation for the entrepreneurial, whether private or public sector – those paying the 40% tax rate. This would not only send out a strong sign to business in competing regions of the UK, but it would spell out that Wales is well and truly open for business.”

But when David Jones, the Secretary of State calls for tax cuts he means a cut for every taxpayer. Now this might suit him but it certainly not what Andrew RT Davies wants.

He wants the ability to vary the rates in the different bands as both the Holtham and the Silk Commission recommended.

The reason he wants this flexibility is that he knows that reducing income tax in Wales by a 1p would mean £200 million less going into the Welsh Treasury.

This would mean more cuts on the cuts already embarked on by the Westminster government. Add to that figure another £300 million that Wales’s is underfunded under the Barnett formula then you’re talking serious money.

Davies knows going to the Welsh electorate with a manifesto promising such cuts in their public services is not likely to endear the party to the Welsh public. In this Davies is right and has a better feel for the pulse of the Welsh people than David Jones. That’s why Davies is Welsh leader and Jones is merely Cameron’s or, as in this case, Osborne’s bag carrier in Wales.

So back to today’s announcement from Jones and Davies, they may want a referendum but when it comes to the tax cut agenda both are not singing from the same hymn sheet.

 

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