Welsh election: Tories pledge income tax cut if 65,000 job target is met

Some income tax powers were devolved to ministers in Cardiff in 2019

The Welsh Conservatives have vowed to cut income tax if a target to create 65,000 new jobs is met by 2025.

The party said it would cut the basic rate by 1% before the next Senedd election in five years time.

It comes as the Tories launched their Senedd election manifesto in Wrexham. Pledges include an M4 relief road and ending business rates for small firms.

Senedd group leader Andrew RT Davies said Wales needed a "critical national mission" for the economy.

The Welsh Conservatives will be defending 11 seats when voters go to the polls on 6 May.

It was the third-largest party at the previous Senedd election, but at the UK general election in December 2019 it gained six constituencies from Labour, giving the party the best result in Wales since the days of Margaret Thatcher.

The party also promised to build five new or upgraded hospitals, 100,000 new homes and provide extra funding for the NHS every year.

A £10 minimum wage for social care workers is pledged, Natural Resources Wales would be scrapped and Cardiff Airport sold off.

• Key points from Welsh Conservative manifesto

WALES ALERTS: Get extra updates on BBC election coverage

The Conservatives' manifesto says it would be the party's "national mission" to create 65,000 new jobs.

The document says the party would cut the basic rate of tax once the new jobs had been created, but does not specify the size of a cut.

A press release for the party says it would be a 1p cut in the £1 on the basic rate - currently a total of 20% for earnings between £12,571 and £50,270 a year.

There were 2.1m basic rate taxpayers in 2020/21.

Andrew RT Davies launched the manifesto at the JCB factory in Wrexham on Tuesday

Asked how the tax cut would be funded, a party spokesman said: "By having more people paying into the pot, we can reduce the amount of money everyone puts in, so that people can spend more money in their local economy, creating more jobs in return."

The policy suggests the Conservatives would make the tax cut in the last financial year before the next Senedd election in 2026, provided the jobs target is met.

Manifesto pledges on tax include a freeze for council tax for at least the next two years, and cutting the Welsh version of stamp duty, called land transaction tax (LTT).

The changes would mean first time buyers would not pay LTT, while the threshold for others would be raised to £250,000.

• No income tax rise 'at least' until recovery: Labour

• Who is Senedd Tory leader Andrew RT Davies?

What is Welsh income tax?

Since 2019 Welsh ministers have been able to vary income tax rates from those set by the UK government by up to 10p in the pound.

This money, along with some other taxes collected in Wales and cash from Westminster, funds Welsh public services run from Cardiff.

The income tax powers have so far not been used.

Labour, which has been leading the Welsh government since the start of devolution, vowed at the last election not to raise taxes.

In its manifesto this year the party changed tack, only ruling out a tax rise until the economy recovered from the impact of Covid.

Guto Ifan from Cardiff University estimated that in 2025 a cut of 1p to the basic rate would cost around £220m.

"There are huge post-pandemic spending pressures and UK gov spending plans have already been reined back significantly. There are difficult trade-offs facing the next Welsh Government, and tax cuts will need to be balanced against these," he tweeted.

WALES ELECTION: THE BASICS

What's happening? On 6 May, people will vote to elect 60 Members of the Senedd (MSs). The party that can command the support of a majority of MSs will form the Welsh government. Find out more here.

What powers does the Senedd have? MSs pass laws on aspects of life in Wales such as health, education and transport - and have some tax powers.

The manifesto commits to building the M4 relief road

The Conservatives said they would invest £2bn to create modern infrastructure for Wales, including the M4 relief road which was scrapped by the Welsh government in 2019 and was then estimated to cost £1.6bn.

The cash would also be used to upgrade the A55 and A40 and to create 20,000 charging points for electric vehicles.

On Radio Wales Breakfast Mr Davies denied there was a contradiction between his road plans and the UK government's plans to accelerate cuts in carbon emissions.

"The carbon engine is disappearing out of the transport system," he said, "because by 2030 it will be illegal to sell petrol and diesel engines and they'll be phased out by 2035."

"So we're moving to an environmentally friendly mode of transport here in Wales and indeed across the United Kingdom, and it's incumbent on any government to make sure we put that investment in the green infrastructure."

"It's really important that we have a big sign that says open for business to people so that we can create these 65,000 jobs that ultimately would be rewarded with a tax cut at the end of the parliament," he said.

He said 15,000 of the 65,000 jobs would be in "green jobs".

"Many of those jobs would be engineering jobs," he said, in installing charging points, and in "developing green energy projects and concepts around Wales".

Other pledges include:

• boosting opportunities for workers hit hard by the pandemic with a Retrain, Gain programme to get people into key sectors

• supporting "micro businesses" by paying the National Insurance contributions of two new employees for two years

• setting up a new business development agency called Innovate Wales in north Wales

Analysis by David Deans, BBC Wales political reporter

The Conservatives are the only party in this election that is proposing cutting the Welsh rate of income tax.

But it's actually less of a cut than what the party suggested back in 2016, when Andrew RT Davies said the Tories would aim for cutting the basic rate by 2p.

Tuesday's plan also depends on a rise in the number of jobs, and it's also not baked into the manifesto itself.

It might be surprising how limited it is when Mr Davies had, years ago, sacked some of his frontbench because they disagreed with the powers being devolved to do this.

But it perhaps reflects how difficult it is in 2021 to promise tax cuts.

Especially when Mr Davies' party colleagues at the other end of the M4 are suggesting the opposite, with a million more across the UK expected to enter the basic tax bracket in the next five years.

Leaders debate: If you would like to be part of the virtual audience for the BBC Wales Election 2021 Leaders Debate on 29 April, please email us your details to [e-mail].

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