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Published on 19 October 2020

Welsh Government: Tax Devolution in Wales – Enabling changes to the Welsh Tax Acts

LITRG and CIOT submitted a joint response to this Welsh Government consultation, which looked at how legislative changes should be made to Welsh devolved taxes in certain circumstances. Essentially, the consultation concerned legislative amendments in relation to avoidance, evasion, international obligations, situations of exceptional need, and in response to tax policy changes to UK ‘predecessor’ taxes. The Welsh Government has a preferred option, which is to introduce three regulation-making powers – each power would be available in specified circumstances.

Illustration of a speech bubble with LITRG / CIOT joint response written inside
(c) Shutterstock / siridhata

Our response started by noting that our preference is for tax law to be set out in primary legislation in so far as it relates to the exercise of powers setting out what I subject to tax and imposing burdens on taxpayers. Ideally, secondary legislation should only be used for administrative matters and the setting of rates. This is to ensure proper scrutiny of legislation that imposes a burden on taxpayers.

Having said this, we noted that the proposal provides a balance between the competing needs of speed, scrutiny and responsiveness. We suggested that there should be a few additional safeguards, and that the proposed use of these regulatory powers should be subject to regular review and evaluation.

Although the time is perhaps not right for the introduction of an annual Welsh finance bill, we noted that this should be kept under review, particularly if Wales gains further tax powers.

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