Senedd votes down Conservative call for tax cuts

The Conservatives in turn claimed that Welsh families are paying more and getting less under Labour’s ‘high-tax regime’.

Following the debate on Wednesday 14 May, the Conservative motion was rejected, with 33 members abstaining and 12 voting in favour. Amendment 1 (essentially an alternative motion), proposed by Labour, was approved with 23 votes in favour and 13 against. Meanwhile, amendment 2 (another alternative motion), put forward by Plaid Cymru, was not called for a vote due to the Labour amendment having passed. You can read more about these two amendments here.

Opening the debate, Sam Rowlands, Conservative Finance Spokesperson, outlined the Welsh Conservatives’ economic proposals, which include a 1p cut to the basic rate of income tax, funded by reducing “inefficiencies and waste” in the Welsh government. He said this would benefit 1.7 million people with an average gain of £450 per working family.

As examples of waste Rowlands suggested the Welsh Government “have squandered hundreds of millions on vanity projects, ranging from the default 20 mph speed limit to bloated Senedd reform”. He also mentioned the setting up of overseas offices and empty Welsh Government buildings.

Turning to other parts of his party’s motion, Rowlands proposed restoring 75% business rates relief for retail, hospitality and leisure sectors, eliminating business rates for small businesses and introducing local referendums for any council tax increases above 5% to increase democratic accountability.

Carolyn Thomas (Lab) intervened to ask how public services would be funded if taxes were cut and council tax rises were limited. Rowlands responded by repeating his commitment to eliminating public spending waste.

Heledd Fychan (Plaid Cymru) criticised the Welsh Conservatives' proposal for council tax referendums, suggesting it shows a “lack of understanding” of local government funding and overlooks the cost and complexity of referendums. Labelling the idea “impractical and regressive”, she said “Plaid Cymru [have] spearheaded work to establish a fairer model for council tax” which could have reduced council tax bills for thousands of low-income households.

Fychan emphasised that the government should aspire to lower taxes ‘fairly’, without inflicting deep cuts to public services. “The reality is that Wales’s devolved fiscal levers, constrained as they are by the unwieldy one-size-fits-all income tax bands set by Westminster, are currently ornamental for all intents and purposes”, she said, calling for the Senedd to be able to set Welsh-specific income tax bands to support redistribution and investment. She reported Scotland’s success with similar powers.

Plaid’s amendment called on the Welsh Government to initiate the process outlined in the Government of Wales Act 2006 to seek powers currently reserved to Westminster to enable the Senedd to set all rates and bands for Welsh income tax. It also called on the Welsh Government to establish a preferential business rates multiplier for SMEs, and to re-engage with the programme of council tax reform.

Laura Anne Jones (Con) criticised Labour-run councils for imposing a council tax increase of 8–10% in many areas across Wales. She suggested that services have worsened despite rising taxes, adding: “If council tax had grown at the same rate as in England since 2010, the average band D household in Wales could be £350 a year better off”. She supported her party’s proposal to cut income tax, saying the motion will put “power and money” back in the hands of people.

Mike Hedges (Lab) stated: “The Conservatives' view could be summarised as that they do not like taxation”. He suggested that Scandinavian-quality services cannot be achieved with American levels of taxation, arguing that higher taxes correlate with better public services. He accused Plaid Cymru of wanting higher spending without backing tax increases, especially when they oppose even the smallest wealth tax proposals.

On council tax, the Labour MS said that Wales' band D council tax is £110 lower than England’s average, and that over 256,000 low-income households receive support through the council tax reduction scheme. He called for system reform, considering the current approach ‘unfair’, and proposed linking council tax directly to property value percentages.

Samuel Kurtz (Con) accused Welsh Labour tax and business policies of being damaging to the economy, warning that decisions made now will determine whether Wales grows or falls further behind the rest of the UK. He criticised cutting business rate relief to 40% for retail, hospitality, and leisure and increasing employer national insurance contributions, claiming this has led to the closure of businesses.

Kurtz said that the Conservatives offer “a different path” by restoring 75% business rate relief and abolishing business rates for small firms. “I make no apologies for being a low-tax Conservative”, he said, claiming that this approach would still protect public services and allow people to better manage their own money.

Another Conservative MS, Janet Finch-Saunders, echoed Kurtz’s message while also disapproving of the Welsh Government's visitor levy policy. She cited the Federation of Small Businesses, which has stated Welsh businesses are now at a competitive disadvantage compared to England.

Mark Drakeford, Cabinet Secretary for Finance and Welsh Language, responded to the debate for the Welsh Governent. He cited the Office for Budget Responsibility, which estimates that a 1p cut in income tax in Wales would cost £299 million. He added that the Conservatives' proposals of restoring 75% business rate relief and abolishing business rates for SMEs would cost £52 million and £309 million respectively. He claimed that “the amount of money that this motion spends is £660 million”.

The minister praised his government's successes, including outperforming the UK in income tax growth, leading to a projected £634 million more for public services through to the decade’s end. Additionally, land transaction tax and landfill tax revenues that have added £376 million to the Budget this year. “This is the red Welsh way: progressive and effective in our taxation”, he concluded.

Closing the debate, Darren Millar, Leader of the Welsh Conservatives, accused Labour and Plaid of driving up taxes, hurting families and businesses, and delivering worse services in return. He claimed that the government is wasting money on Cardiff Airport and international offices, while the tax burden is higher in Wales for those with lower incomes compared to England. He accused the minister of reviewing income tax in order to raise it further, suggesting that his party would like to see taxes go down.

Millar praised his party’s “low taxation” beliefs and contrasted these to “the parties on the left whose instinct is to tax anything that moves or anything that thrives and to choke the life out of it”.

You can read the full debate here.