Income tax hike for high earners backed by Plaid Cymru

Plaid's tax plan would affect people earning more than £50,271 a year

Major income tax rises for high earners have been backed by Plaid Cymru politicians, BBC Wales has learned.

A majority of its Members of the Senedd (MS) voted for a 4p in the pound increase for people earning more than £50,000 and a 5p hike for those bringing in more than £150,000.

But the idea has not been formally announced and it is not clear why.

A Plaid spokeswoman said the party would explore how changing taxes could look in practice "over coming weeks".

The plan was to be presented as a "solidarity tax" to help fund public services during the cost of living crisis.

Plaid Cymru is not in government but supports Welsh Labour ministers through the co-operation agreement.

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

Ministers can adjust the basic rate, higher rate and additional rate by 10p in every £1, but do not have powers over the thresholds at which people pay the different rates.

Adam Price talked generally about a "solidarity tax" in his party conference speech

Minutes of a meeting of Plaid Cymru's group in the Senedd held in October said seven MSs voted for raising taxes for those earning more than £50,271 in order to fund public services, with three voting against.

The minutes said: "This can be presented as short-term solidarity tax, for specific purposes.

"Some members felt the need to consider the implications of doing this further, and the potential unfairness of raising the higher and extra tax to the same extent."

In 2023-24, a 4p increase in the higher rate of income tax would raise an estimated £132m and a 5p increase in the additional rate would raise an extra £25m.

Income Tax Rates and Bands

• Personal Allowance - up to £12,570 - 0p

• Basic Rate: £12,571 to £50,270 - 20p

• Higher Rate - £50,271 - £150,000 - 40p

• Additional Rate - £150,000+ - 45p

The proposal was supported before Plaid Cymru's annual conference, where party leader Adam Price talked generally about the prospect of a "solidarity tax" and argued Wales' income tax powers should be "used progressively to shield the vulnerable and protect our public services".

But in an interview with the BBC Politics Wales programme on the weekend of Plaid Cymru's conference, he declined to say by how much Plaid would raise income taxes.

He said it would only be possible to "set out that detail" following the UK government's Autumn Statement, which was delivered on 17 November.

'Pie in the sky'

On 18 October, Mr Price raised the idea of a "solidarity tax" in the Senedd and called on First Minister Mark Drakeford to consider raising the top two rates of income tax to "help us relieve some of the pressure on local services".

Mr Drakeford said was "no chance" the tax rises would cover the costs outlined, describing the idea as "pie in the sky".

A party spokeswoman said: "Plaid Cymru remain focused on what matters - supporting the most vulnerable in our communities through one of the hardest winters we have faced.

"We look forward to exploring how this could look in practice over the coming weeks by scrutinising the Welsh government budget and engaging with external expert organisations including the Wales Governance Centre."

The Welsh government's draft budget for 2023-24 is due to be published on 13 December.