Public opinion on devolution of income tax

As expected, the referendum on devolution of income tax powers to Wales was addressed in First Minister's Questions yesterday. This is the Wales Today report:


Carwyn Jones made the assertion that a referendum on income tax powers was at present unwinnable, but might be winnable at some point in the future. This is a completely ridiculous thing for him to say. The survey evidence shows that most people in Wales already want income tax powers to be devolved.

This is a graphic from an ICM poll for the Silk Commission published in July 2012, click it to see a larger version. The full document is here.


64% want income tax powers devolved to Wales. Interestingly, the percentage is substantially higher for women than men, for younger adults than older adults, for Welsh-speakers than non-Welsh-speakers, and for those who see themselves as Welsh rather than British. Yet in every single category there is a clear margin in favour of setting Welsh rates of income tax.


For what it's worth, the document says that this finding is consistent with previous research that has been conducted by ICM and other polling organizations. I'm not aware that there have been many surveys that have specifically asked about income tax, but these two surveys should be helpful:

At present, the Welsh Assembly has no tax raising powers. Which one of these statements comes closest to your view?

It should have the power to increase or reduce all taxes in Wales ... 28%

It should have the power to vary some, but not all taxes in Wales, within limits agreed by the UK Government in Westminster ... 36%

It should not have the power to increase or reduce any taxes in Wales ... 32%

Don't know ... 4%

ICM survey for BBC, February 2012

Should the Welsh Government have the power to vary income tax, in your opinion?

Yes ... 46%

No ... 36%

Don't know ... 17%

Beaufort survey for Western Mail, March 2012

The BBC question is rather vague, but some taxes "within limits agreed by the UK Government" would include income tax, because the UKG has in fact now agreed to us having the ability to set Welsh rates of income tax if we vote for it.

If people are aware of any other surveys, I'll be very happy to add them.


This evidence shows that there is absolutely no foundation for Carwyn Jones to claim that the referendum on income tax powers is unwinnable. But the tragedy is that we've heard it all before. It's exactly the same line that Peter Hain used when he kept claiming that the referendum on primary lawmaking powers was unwinnable.

It shows that Labour are completely out of touch with what people in Wales actually think.

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Anonymous said...

Facts 1, Labour 0

Welsh not British said...

Peter Hain, like many in Labour really do not like it when people bring facts to a debate.

Anonymous said...

Tell the public that taxes are likely to fall and most will vote yes.

Tell the public that if taxes are cut public services will suffer and you'll probably get a different reaction.

I think Carwyn Jones is right. The timing is not right. But then again, I don't think it ever will be.

Anonymous said...

Trouble with this is that we have to contend with 35 years of Thatcherism and Post-Thatcherism telling us that all tax is bad with all and sundry paying homage to this idea. Unfortunately, we have all internalized this way of looking at the world, and it's going to take a real effort to re-educate people.

I think the only way it will work is for Plaid Cymru to open the whole taxation debate up in wider terms and present a case to the people of Wales that having complete control of this issue(i.e independence) can spare us from years of austerity as part of the UK state.

E.G. Annual deficit of the UK state: 140 billion. Annual deficit of Wales: 9 billion.
The Conservatives are hellbent on reducing this deficit by hook or by crook and their future plans to slash public spending will leave a huge amount of casualties in places like Wales. Plaid Cymru need to argue that a 9 billion deficit is more manageable- after all it's not that much more than the deficit run by similarly sized countries in Europe. Our deficit could be reduced in a much more humane and socially-conscious way!

In reducing that deficit, there are many ways it could be done which does not mean wholesale social destruction. For example, what about starting to point out where most big companies based in Wales, e.g Tescos etc, actually pay tax/VAT,.i.e in England! Addressing this anomaly would add millions to a Welsh Treasury's annual take.

Let's not shy away from the big debate!

Anonymous said...

Why couldn't Wales set tax rates on companies where their HQ are. Therefore reduce tax rates for companies with their HQ in Wales, then you'll see the Taff tiger coming through.

Anonymous said...

I'm no fan of Carwyn, and certainly not of Welsh Labour, but I think he is right. Opinion poll results do not automatically convert into referendum victories. In Wales we have the main political party (Labour) who would inevitably be split over the issue, a tiny 'native' media which has limited reach and will not necessarily be supportive, and a public who are largely detached from politics and get their limited political information from London media who either ignore wales or are hostile to further devolution. Until Carwyn can take Welsh Labour with him or some cataclysm effects a significant shift in Welsh politics I can't see much progress being made on this. The very idea of holding a referendum for such small changes is farcical. It's depressing. Any self respecting party, whether unionist or nationalist, would be demanding parity with Scotland as a minimum. At least Mabon said half a loaf was better than none, these days we feel we are not worthy even of crumbs.

Anonymous said...

It's misleading to say the Welsh deficit (if it really is £9bn) is better than the UKs or comparable to European countries. Because of our small GDP the deficit is actually much, much worse than any European state. Of course, we are not a state yet, so it's unfair to imply that we have necessarily had control over our own finances to date. We didn't make the decisions that led to structural deficiencies in the Welsh economy. We didn't de-industrialise Wales through the Assembly or indepedence, although we don't seem to have a robust vision of re-industrialising Wales either.

Importantly, our deficit is not linked to the question of income tax being devolved and shouldn't be used as an excuse not to devolve it.

The possibility of losing the referendum is also worrying. It might mean no further devolution at all for the forseeable future. But alot of this is hard to determine.

MH said...

I have to say that I'm amazed at the pessimism. I fully accept that the polling figures I've shown don't provide any guarantee of a Yes vote, but they are a very good indication of the public mood, and it is clearly ridiculous for Carwyn to claim that the referendum is "unwinnable".

Over the next few months there are bound to be more polls which ask the specific question. We're due another ITV YouGov poll soon and there will be the BBC poll for St David's Day next year, so we'll see if anything has changed. But I remember that when people were agonizing over whether to call the primary lawmaking powers referendum, the general feeling was that a ten point margin was fine and a twenty point margin plenty.

So don't agonize. Have confidence in that we in Wales are entitled to no less than Scotland has already had since 1999.


I don't think the vote will have anything to do with whether people see income tax going up or down. But, for what it's worth, nobody is talking about putting it up; not even Labour, for Carwyn (tellingly) said at FMQs that there was no point in devolving a tax unless you intended to reduce it.

However, it must be said that the savage cuts in public spending are only just beginning to bite. All sorts of services that we used to regard as essential (especially those delivered by local authorities) are being cut back because they are not statutory. It is quite possible that the public outcry will grow to the point where money has to be found for them, but it will be a matter for parties to decide their policies, and people to vote for the party with the policies they like.


On the matter of our fiscal deficit, I agree with 09:00 that things in Wales are much worse than they are in other countries, but also agree that it doesn't have anything to do with whether we should have the power to set rates of income tax. In other states in which regions and nations can set their own rates of tax and be responsible for part of their income, there is invariably some sort of mechanism by which richer regions transfer some funds to poorer regions. We just need to set up that mechanism ... which is, of course, what the Holtham Commission was all about.


As for apportionment of taxes (e.g. whether part of the taxes on Tesco's profits are credited as having been made in Wales) I'd advise people to look again at this post on disaggregated tax receipts. The methodology documents I linked to show how the UK Treasury sees things, and it will be up to the Welsh Government to either go along with this or come up with a GERW of their own. The deficit might be out by "millions", but it almost certainly won't be out by billions.


Finally, I don't think that this referendum will act as a roadblock to further devolution in the same way as was the case with the referendum on primary lawmaking powers. Silk Part 2 will almost certainly recommend moving to a reserved powers model and the devolution of policing; probably recommend a legal jurisdiction, some control over justice, broadcasting, energy and natural resources; and throw in a few little things like speed limits, hunting and air guns. I can't imagine that a referendum will be necessary for these things. But I wouldn't have any objection to a referendum on these things as a package ... in fact rolling them together with a question on tax setting powers might be a very good way of ensuring we get tax setting powers sooner rather than later.

WelshnotBritish said...

MH, have you ever thought of crowd funding and commissioning a poll like WoS have done? (This is the biggest Welsh blog which is why I lay it at your door).

Anonymous said...

A referendum fought where there were large numbers of the Labour party campaigning against probably would be unwinnable.
The Internal mechaunics of the Labour party determine the pace of devolution yet again!
Twas ever so

kp said...

Any future changes to Barnet will occur through devolved matters of taxation rather than transfer.

As for further and deeper devolution, does anyone really care? Not one jot, just as long as things get cheaper rather than dearer.

The moment devolution, in all its various forms, starts to cost the taxpayer is the moment it crumbles. Unfortunately, I don't think there will be anyone wanting to pick up the pieces!

Anonymous said...

A referendum can't be won without Labour. Would like that to be wrong and maybe it will change, but not with the Tories in power in London.

Anonymous said...

I'm surprised more hasn't been made about corporation tax. If we have income tax we need CT to create more jobs surely. We should be allowed to be responsible for our failures but have a playing field where we can create success too. For south Wales air passenger tax would also help.

MH said...

I'm very impressed by what Wings has done, Stu; but from what I know about crowdfunding, it tends to work well once or twice, but drops off after that.

Whatever happens, we're unlikely to get a new Wales Act before late 2014 or early 2015; and we can't have a referendum until after that. So there'll be plenty of time to let others ask the question.


I've already said it will be harder to win a referendum if Labour are opposed, but it certainly wouldn't be unwinnable, even if they were. The point of this post was to note that Carwyn was being disingenuous. His line was to say that the people of Wales didn't understand tax setting powers and would therefore vote no. He is trying to shift attention away from the fact that it is in fact the Labour Party that doesn't want it, not the people of Wales.

A lot will depend on the referendum trigger arrangements. If a two-thirds supermajority is required, then we will not get the referendum without Labour support (unless Labour get less than 20 seats in 2016) and Labour will only support it if they intend to campaign for a Yes.

But if only a simple majority is required, then there is every chance that we will get an early referendum soon after 2016. I'm sure that both Plaid and the LibDems would make the referendum a red-line issue in any coalition negotiations with Labour, as Plaid did in 2007. Even better would be for Plaid to be the largest party after 2016 and perhaps go into coalition with the LibDems. We could operate as a minority government because we know that Labour and the Tories (with UKIP) will cancel each other out on every issue ... but the Tories will vote with Plaid and the LibDems to trigger the referendum.

Labour would then be put in the very awkward position of having to campaign against what polls show people want. I think it very unlikely that they will do that. So there's no reason to be pessimistic.


To 09:55, I have always said that it is better to have a small degree of control over a wide range of taxes than a large degree of control over just a few. So we should keep campaigning for more and more.

It's very disappointing that the UKG has refused Silk's recommendations on aggregates tax and air passenger duty, but I think their intention is to choke the WG as much as possible in an attempt to get them to say Yes to the income tax referendum as the only way to borrow to any meaningful extent. In fact Cameron's "foot on the windpipe" analogy is a perfect description of what they are doing.

With corporation tax in particular, things in the Six Counties seem to have stalled. But if they were to get it, then Scotland would certainly get it too, and it would then be hard to refuse it to us as well.

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