Two Senedd committees have criticised the Welsh Government’s
approach to new tax legislation that it is pushing through the
Welsh Parliament.
The Finance Committee and the Legislation, Justice and
Constitution Committee have both published
reports analysing the Welsh Tax Acts etc. (Power to
Modify) Bill and questioned whether the power proposed in the
Bill is appropriate.
The Bill in its current form would give Welsh Government
Ministers power to amend Welsh Tax Acts quickly using
regulations.
Rather than needing to pass ‘primary legislation’ and give
Members of the Senedd opportunities to amend and debate each
proposal; this Bill would give Welsh Government Ministers power
to change Welsh tax laws using regulations (a type of law often
called ‘secondary legislation’) which would only allow the Senedd
to accept or reject the new law. The Bill would also allow
Ministers to change the law with immediate effect, before seeking
Senedd approval.
Giving evidence to the Finance Committee, the former clerk of the
Assembly between 2001 and 2007, Sir Paul Silk, expressed a
general concern with “the growth in the use of secondary
legislation”, suggesting that “legislatures should remain
sceptical and vigilant when Governments propose any enhancement
of their own powers to make legislation without full scrutiny by
the legislature”.
The reports raised concerns that this approach would marginalise
the Senedd’s democratic mandate, with both Committees in favour
of developing a longer-term package of legislative measures, such
as a finance Bill, to deliver tax proposals.
The Legislation, Justice and Constitution Committee’s report
recommended that the Bill should be amended to include a
so-called ‘sunset provision’ whereby the power granted to the
Government to make regulations automatically expires after July
2027. This would provide the Welsh Government with sufficient
time to develop a better approach to legislating on devolved
taxation.
The Finance Committee questioned the Welsh Government’s
justification for seeking to make retrospective changes to Welsh
tax laws, given the uncertainty this would create within the
Welsh tax system.
To protect the rights of taxpayers, the Committee concluded that
making changes retrospectively must be limited in certain
circumstances, such as no further back than the date of the UK
predecessor tax change or the date of a formal Welsh Government
announcement.
, Chair of the
Finance Committee, said: “As it stands, the
majority of the Committee is content for the Bill to proceed to
the next stage, but we urge the Welsh Government to take on board
the recommendations in our report which will provide important
safeguards to the use of this new power.
“Tax devolution is a relatively recent development in Wales and,
as the Welsh tax system matures, it is important for the Senedd
to be satisfied that developments are proportionate and in line
with democratic principles.
“We have reservations with the Bill’s approach and believe that
the Senedd must be given the best possible chance to scrutinise
and influence new tax laws as opposed to letting the Welsh
Government change tax laws as and when it sees fit.”
, Chair of the Legislation, Justice and
Constitution Committee, said: “Our report concludes that
the Bill does not represent an appropriate legislative vehicle to
make changes to the Welsh Tax Acts and it should be regarded as a
short-term, temporary measure only.
“The justification provided by the Minister for the approach
proposed is inadequate and the Committee is agreed that the Bill
provides far too much power for the Welsh Ministers at the
expense of the role of the Senedd.
“If the Welsh Government is determined to move ahead with this
Bill, the Committee is clear that they should respond positively
to our recommendations, in particular, to include a ‘sunset
provision’. This will provide the Welsh Government with time to
develop more appropriate approaches involving the use of primary,
rather than secondary, legislation.”
ENDS
Notes
- The Finance Committee
report and the Legislation, Justice and
Constitution Committee report are available here.
- ‘Welsh Tax Acts’ means the Tax Collection and Management
(Wales) Act 2016, Land Transaction Tax and Anti-avoidance of
Devolved Taxes (Wales) Act 2017 and Landfill Disposals Tax
(Wales) Act 2017.
- A finance Bill means a Bill making provision relating to the
devolved Welsh taxes (e.g. changes to the Welsh Tax Acts to
introduce or change reliefs, and set the rates of tax). This
would provide a mechanism for making changes to the Welsh Tax
Acts.
