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Pledge to cut basic and higher rate income tax by Tories Pledge to cut basic and higher rate income tax by Tories
(about 1 hour later)
Welsh Tory leader Andrew RT Davies has said he wants to use new income tax powers to take 5p off the higher rate and 1p off the basic rate in Wales.Welsh Tory leader Andrew RT Davies has said he wants to use new income tax powers to take 5p off the higher rate and 1p off the basic rate in Wales.
He said cutting the higher rate from 40% to 35%, using powers announced in the Spending Review, would save those earning £50,000 about £400 a year and cost around £75m.He said cutting the higher rate from 40% to 35%, using powers announced in the Spending Review, would save those earning £50,000 about £400 a year and cost around £75m.
Cutting the basic rate from 20% to 19% would cost around £180m a year.Cutting the basic rate from 20% to 19% would cost around £180m a year.
Someone earning £25,000 would save around £70 a year from that reduction.Someone earning £25,000 would save around £70 a year from that reduction.
On Tuesday, Chancellor George Osborne said control of some of the income tax levied in Wales can now be devolved without a referendum. On Wednesday, Chancellor George Osborne said control of some of the income tax levied in Wales can now be devolved without a referendum.
'Frightened''Frightened'
The sharing of tax powers between ministers in Cardiff and London would mean the Welsh government controlling £3bn of taxes a year by 2020.The sharing of tax powers between ministers in Cardiff and London would mean the Welsh government controlling £3bn of taxes a year by 2020.
But Mr Davies told BBC Wales Welsh Labour would be "frightened" of power over income tax as it "wouldn't know what to do with it".But Mr Davies told BBC Wales Welsh Labour would be "frightened" of power over income tax as it "wouldn't know what to do with it".
First Minister Carwyn Jones has said the devolution of some power over income tax was right "in principle" but Welsh ministers needed more details on the plans and timescale involved.First Minister Carwyn Jones has said the devolution of some power over income tax was right "in principle" but Welsh ministers needed more details on the plans and timescale involved.
Mr Davies he wanted the cut the higher income tax rate to "make sure the entrepreneurial rate is attractive enough to make entrepreneurs stay and come to Wales to create quality jobs that pay increased take-home pay". Mr Davies said he wanted the cut the higher income tax rate to "make sure the entrepreneurial rate is attractive enough to make entrepreneurs stay and come to Wales to create quality jobs that pay increased take-home pay".
"Five pence seems to be a sensible difference between what Wales would raise and what England would raise," he said."Five pence seems to be a sensible difference between what Wales would raise and what England would raise," he said.
"That would offer enough scope to say to businessmen and women 'Wales is open for business'.""That would offer enough scope to say to businessmen and women 'Wales is open for business'."
Labour's "instinct", Mr Davies said, was "only to raise tax and take money off people".Labour's "instinct", Mr Davies said, was "only to raise tax and take money off people".
In 2013, Welsh Liberal Democrat leader Kirsty Williams said she wanted to lower the basic rate of tax from 20p to 18p, if Wales gained tax varying powers.In 2013, Welsh Liberal Democrat leader Kirsty Williams said she wanted to lower the basic rate of tax from 20p to 18p, if Wales gained tax varying powers.
Analysis by Nick Servini, BBC Wales political editorAnalysis by Nick Servini, BBC Wales political editor
The Conservatives have come out of the blocks first saying that not only would they like to take five pence off the higher rate, but a penny off the basic rate as well.The Conservatives have come out of the blocks first saying that not only would they like to take five pence off the higher rate, but a penny off the basic rate as well.
And when it comes to the inevitable question of where they would find £200m to cover the lost revenue, they point to policies such as abolishing free prescriptions and tuition fees.And when it comes to the inevitable question of where they would find £200m to cover the lost revenue, they point to policies such as abolishing free prescriptions and tuition fees.
Whatever the merits of these policies, the point is that it changes the dynamic of assembly politics in that for the first time a party can go into an assembly election with a pledge to put money in people's pockets.Whatever the merits of these policies, the point is that it changes the dynamic of assembly politics in that for the first time a party can go into an assembly election with a pledge to put money in people's pockets.
In the meantime there is still deep suspicion among Labour ranks.In the meantime there is still deep suspicion among Labour ranks.
The Pontypridd MP and shadow work and pensions secretary Owen Smith is keen to remind everyone of the brutal reality of public spending in Wales: the tax take is £16bn while public spending is £32bn, in other words it is dangerous for Wales to separate itself from the other wealthier parts of the UK when it comes to major sources of revenue like income tax.The Pontypridd MP and shadow work and pensions secretary Owen Smith is keen to remind everyone of the brutal reality of public spending in Wales: the tax take is £16bn while public spending is £32bn, in other words it is dangerous for Wales to separate itself from the other wealthier parts of the UK when it comes to major sources of revenue like income tax.
Officially the Welsh government is saying it has no problem in principle but it wants to see more details of the guarantees from Westminster to protect spending.Officially the Welsh government is saying it has no problem in principle but it wants to see more details of the guarantees from Westminster to protect spending.
Labour at the assembly has always been lukewarm to the idea of devolving income tax as they cannot see in what circumstances the powers would be used, put the rate up and high earners may leave while a reduction would leave the Welsh government coffers short.Labour at the assembly has always been lukewarm to the idea of devolving income tax as they cannot see in what circumstances the powers would be used, put the rate up and high earners may leave while a reduction would leave the Welsh government coffers short.
The Conservatives say a degree of accountability will mean AMs have a stake in the growth of the economy and as a result lead to better policies.The Conservatives say a degree of accountability will mean AMs have a stake in the growth of the economy and as a result lead to better policies.
On Wednesday, Mr Osborne also promised spending per head on devolved services in Wales would not fall below 115% of spending per head in England.On Wednesday, Mr Osborne also promised spending per head on devolved services in Wales would not fall below 115% of spending per head in England.
Welsh ministers said their budget would fall in real terms and they needed more details on that minimum funding pledge.Welsh ministers said their budget would fall in real terms and they needed more details on that minimum funding pledge.