Devolution of tax process is not fit for purpose – Finance Minister
Finance and Local Government Minister Rebecca Evans is calling on the UK Government to revise the process for agreeing devolved tax powers, following delays in getting powers for a vacant land tax.
The devolution of tax powers will allow the Welsh Government to develop a strengthened approach to central and local taxation in Wales, ensuring it is better able to tackle the needs and priorities of citizens and businesses.
A vacant land tax would help to incentivise developers to progress stalled developments to help provide high quality, safe and affordable housing.
Speaking in a debate in the Senedd the Minister will stress the need for a reformed system of devolving taxes which delivers better outcomes for the people of Wales.
Rebecca Evans, Minister for Finance and Local Government, said:
“We began a national debate in 2017 about how new tax powers could provide opportunities to help us realise our ambitions for Wales. More than four years later those opportunities are still not available to us. The process is not fit for purpose and must be improved.
“There is a compelling case for the devolution of vacant land tax, given its alignment with existing devolved powers and relatively narrow scope. Two years of work went into ensuring the UK Government had the information it needed to consider this case. We agreed it was for the Welsh Government to make policy decisions about how any new devolved tax would operate, and for the Senedd to decide whether to pass any new tax into law.
“Despite this, and despite extensive information already being provided, the UK Government continues to ask for yet more information on the operation of the tax. We worked with the UK Government in good faith but it is not appropriate for it to attempt to determine devolved policy or get involved in matters which are rightly for the Welsh Government and the Senedd.”
Housing estimates show that an additional 7,400 homes are needed per year for the next five years.
The Minister added:
“A vacant land tax alone is not the solution to the housing crisis, of course, but could help bring forward timely development. As it stands a landowner holding onto land identified for developments leads to a private gain and a public cost. A vacant land tax would incentivise development and create homes for people.”
The Minister has written to the new Financial Secretary to the Treasury to highlight the importance of making progress with the request for powers for a vacant land tax.