The £45bn huge tax give away, financed on the UK’s credit card of already eye-watering borrowing, shows one thing at least, that new Chancellor Kwasi Kwarteng is not afraid to act decisively. But whether his dash for growth will prove inspired or foolhardy we will not have too long to wait - with the economy already moving towards recession and interest rates set to climb further to tackle inflation.
In essence Mr Kwarteng, whose strategy has been labelled by critics as trickle down economics that will mainly benefit the rich, is pinning his hopes on stimulating investment and growth which in turn will create higher tax receipts - as he aims to hit an average 2.5% growth rate over the medium-term.
The UK Government’s fiscal rules, which stipulated that debt should be falling as a share of gross domestic product within three years, is now under review. Concerns that the outcome of the mini-Budget will drive up debt and fuel inflation was reflected in the pound losing more ground against the dollar after his address.
For the Welsh Government it should now consider using for the first its devolved powers to vary income tax bands in Wales by 10p. Mr Kwarteng is abolishing the additional tax rate, so those earning more than £150,000 will pay 40p rather than 45p.
It's a tax band which only impacts 4,000 people in Wales, generating £204m of which around a quarter is kept by the Welsh Government. So, in theory, it could ‘out do’ the Chancellor by reducing the rate below 40p without any significant impact on its budget.
Like Mr Kwarteng, the hope would be that over time it would lead to increased tax receipts to fund public services in Wales. Such a cut could be used as part of a marketing campaign - also extolling why Wales is such a great place to live and work - to attract more high networth individuals from England into Wales. Much better too if they agreed to bring much needed investment and jobs into Wales. The Welsh Government shouldn’t rule anything out on ideologically grounds, but what is in the best interest of the economy.
The basic tax rate band in Wales, which Mr Kwarteng is reducing from 20p to 19p, covers 1.2 million taxpayers residing in Wales generating government revenues of £3.5bn, which the Welsh Government keeps around £1.7bn of.
Unlike the highest tax band, moving the rate of the basic band, whether up or down, would have far more significant consequences on the Welsh Government's budget.
Whether it moves to mirror the increase in the stamp duty threshold in England - known in Wales as the devolved Land Transaction Tax - on homes from £125,000 to £250,000, again the Welsh Government will take stock before responding.
A Welsh Government spokesman said of the two taxes: ""We have had no prior engagement from the UK Government on any of the changes in today’s statement. We will be looking at the detail of the UK Government’s announcements and their impact on our budget.”
Mr Kwarteng has confirmed he is already in discussions with councils across England to establish new regulation and tax light investment zones.
He wants to see them also set up in the devolved nations, but if the protracted talks before agreement was reached by the Welsh and UK governments on establishing a freeport in Wales - and there could be more than one - is anything to go by, then don’t expect anything soon.
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