Adam Price, a challenger to Leanne Wood's leadership of Plaid Cymru has outlined some radical plans for Wales once the country receives devolution of powers for setting tax rates in April 2019.
The second largest party in the Welsh Assembly, Plaid Cymru (12 seats) is awaiting the results of its leadership election next week. The party has a growing voter base and was the second largest vote in the Welsh election in 2016.
Price believes drastically cutting income tax rates, as well as abolishing council taxes and business rates, will stir the economy in Wales and make a positive net contribution.
Currently only Scotland has the power to set its own income tax rates, choosing to introduce new bands of tax for scottish tax payers and increasing taxes for mid to higher earners. You can see the full tax changes for Scotland here.
If Adam Price wins the leadership contest and can influence the Welsh Assembly with his ideas the tax changes for Wales resident taxpayers would be quite dramatic and a big difference between what they currently pay and what the rest of the UK pays.
Proposals outlined by Price are to cut all rates to only one percent above the devolved rate. Essentially this means:
- Basic Rate would become 11 percent.
- Higher Rate would become 31 percent.
- Additional/Top Rate would become 36 percent.
In addition, council tax and business rates would be replaced with a 3 percent land value tax.
Below is a table of how the Welsh income tax changes would look against income taxes in the UK and Scotland:
There are significant differences between the three taxation rules. Scotland and UK taxpayers earning £20,000 pay around £700 more per year in tax. Around £60 a month extra in the Welsh taxpayers' pocket.
On the other end of the scale, someone earning £100,000 in Wales would pay around £8,500 less per year in tax than UK or Scotland. Around £700 a month saved.
The contenders in the leadership contest all agree that something radical is required to boost the Welsh economy, so even if the above rates are not set, an income tax cut could be likely.