A1.540 Devolved taxes in Wales—overview
The Welsh Assembly is a devolved assembly with power to make legislation in Wales.
Originally, the Welsh Government had wide spending powers, but limited tax powers, except in the area of local taxation where it set the level of non-domestic rates and influenced rates of council tax. The bulk of its budget comes from a block grant from the UK Government, and once the grant is transferred, it is up to the Welsh Government, with the Welsh Assembly's approval, to decide how it is spent.
In October 2011, the UK Government established the independent Commission on Devolution in Wales (the Silk Commission) to review financial and constitutional arrangements in Wales. The findings of the Commission are discussed below.
In February 2015, the UK and Welsh Governments announced a St David's Day Agreement, setting a 'funding floor' and committing to significant further devolution, based mainly on recommendations of the Silk Commission but also including some of the changes proposed for Scotland by the Smith Commission (and implemented via the Scotland Act 2016). The Wales Act 2017 gave effect to these commitments.
In 2016, the UK and Welsh Governments agreed a fiscal framework that set out how Wales would be funded to support its existing responsibilities.
Silk Commission—recommendations on Welsh Assembly powers
Silk Commission—recommendations on Welsh taxes
The Silk Commission considered the whole range of taxes, and felt that there were some smaller-yielding indirect taxes and excise duties that, if devolved, would better empower the Welsh Assembly to deliver policy