Income tax: Keeping 20p basic rate in Wales not ruled out

Wales' finance minister has declined to say if she would keep the 20p basic rate of income tax in the wake of the UK chancellor's mini-budget.

Rebecca Evans says she will not be pushed into a "quick announcement" before the Welsh budget is set.

Plaid Cymru said the extra cash "could be used to protect public services from the brunt of Westminster's cost-of-living crisis".

One Welsh Labour MP also argued that the 20p basic rate should be kept.

The mini-budget brought forward a cut to the basic rate a year earlier than planned - Chancellor Kwasi Kwarteng's decision means it will fall to 19p to April.

The Welsh government has had some income tax powers since 2019, but has never used them.

Ministers collect 10p of the rates collected, which they have the power to vary - meaning they could add a penny to the basic rate after it is cut to 19p.

According to Welsh government documents, based on the current 20p rate an extra 1p would have generated £209m in 2022-23.

The basic rate of tax is paid on income between £12,571 to £50,270.

On Tuesday Economy Minister Vaughan Gething warned the Welsh government was facing a £4bn fall to the real value of the budget by 2025 - "worse than even during the decade of austerity".

• What the mini-budget means for you

• The mini-budget and Wales

No 'quick announcement'

Asked the same day by Plaid's Peredur Owen Griffiths if she agreed with Labour Greater Manchester mayor Andy Burnham on leaving the 20p rate as it is, she said it was "normal practice for us to announce those rates alongside the final budget debate".

"We'll be making our announcements in the normal way, rather than being pushed into any quick announcement because of actions on the part of the UK government."

When asked again on Wednesday by Llyr Gruffydd, finance spokesman for Plaid, she said: "I'm not in a position to say anything more today.

"Obviously, there will be discussions and considerations to be had in advance of that, but, certainly, this will be something that we come to as a Senedd to debate and vote on in due course."

The budget for next year is expected to be published in December, with a final vote in March.

Money 'could be used to protect public services'

Mr Gruffydd said: "Using the tax-varying powers at our disposal to maintain the basic rate at 20p in April 2023 and keep tax levels as they are now would provide an extra £200m a year to the Welsh government's budget.

"That money could be used to protect public services from the brunt of Westminster's cost-of-living crisis.

"You cannot on the one hand complain that there is 'no money' but at the same time refuse to use the powers you have to protect the base rate to protect public services.

"And neither can you say 'now is not the time' to look at taxes - just a day after announcing sudden changes to Land Transaction Tax in response to the Chancellor's fiscal statement."

Mike Hedges, Labour MS for Swansea West, warned against such a move.

He told BBC Wales: "People are hurting financially. Paying more tax in Wales than England would make no sense."

Cynon Valley Labour MP Beth Winter was opposed to the chancellor cutting the basic rate.

Beth Winter said: "It should be back at 20p to make sure that the majority of people can buy food, can heat their homes. That's the fair thing to do."

She disagreed with Sir Keir Starmer who said on Sunday he backed the tax cut.

She added the first minister "will need to discuss the matter with the party in Wales and do what is best for the people of Wales".

A Welsh Government spokesman said: "We are carefully analysing the impact of the UK government's financial statement on our budget.

"Decisions about Welsh rates of income tax will be taken as part of the normal annual Welsh Budget process."

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