Assembly to debate the general principles of the Landfill Disposals Tax (Wales) Bill

17 March 2017

Article by Helen Jones, National Assembly for Wales Research Service

View this post in Welsh | Darllenwch yr erthygl yma yn Gymraeg

Image from Flickr by Adam Levine. Licensed under Creative Commons.

The Landfill Disposals Tax (Wales) Bill was laid before the Assembly on 28 November 2016, and introduced in plenary by the Cabinet Secretary for Finance and Local Government on 29 November 2016. The Assembly will debate the general principles of the Bill on 21 March 2017.

The Landfill Disposals Tax (Wales) Bill (LDT) is concerned with establishing the legal, administrative and operational framework to replace Landfill Tax (LfT) in Wales in April 2018. Landfill Tax is currently a UK tax on the disposal of material as waste by way of landfill at landfill sites which are permitted under environmental legislation. The current tax was introduced in 1996 as a key environmental behaviour change driver in encouraging the diversion of waste from landfill, greater recycling, reuse and recovery of waste. Since the tax was introduced it has contributed to a significant reduction in the proportion of waste sent to landfill, and an increase in recycling.

This Bill is the third piece of legislation related to the devolution of tax powers in the Wales Act 2014. The Bill was preceded by the Tax Collection and Management (Wales) Act 2016 which established the legal framework necessary for the future collection and management of devolved taxes in Wales and the Land Transaction Tax and Anti avoidance of Devolved Taxes (Wales) Bill, which will replace Stamp Duty Land Tax from April 2018.

Further information on the background to the Bill, an overview of its parts, a summary of financial implications, and a Welsh glossary are provided in the Research Service’s Bill Summary (PDF, 844KB).

The Finance Committee reported (PDF, 1MB) on its Stage One consideration of the general principles of the Landfill Disposals Tax (Wales) Bill on 10 March 2017.

The Finance Committee’s report sets out a number of recommendations aimed at strengthening the legislation. For example, the Committee would like to see the proposed rates of taxation, a list of qualifying materials and provisions for bad debt relief, included on the face of the Bill.

Whilst the Welsh Government intends to bring forward secondary legislation in relation to some of these provisions, the Committee remains concerned that secondary legislation is not subject to the same amount of scrutiny as a Bill.

The Committee also believes that businesses need certainty when it comes to the application of new tax legislation, and that including such detail in the law itself would help to address concerns.

The Committee heard considerable evidence in relation to the importance of the Landfill Disposals Tax Communities Scheme. The Committee recommend that a Communities Scheme is included on the face of the Bill to show commitment to the scheme going forward, but accept that some of the detail could be specified in regulations.

The Constitutional and Legislative Affairs Committee considered the appropriateness of the provisions in the Bill about powers to make subordinate legislation. Its report (PDF, 2MB) was also published on 10 March 2017.

Subject to the Assembly agreeing the general principles of the Landfill Disposals Tax (Wales) Bill, the Bill will proceed to Stage Two (detailed Committee consideration of the Bill and any proposed amendments). Stage Two proceedings are expected to be completed by 26 May 2017.

New Publication: Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Bill – Bill Summary

10 January 2017

Article by Christian Tipples, National Assembly for Wales Research Service

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

Introduction

Date of introduction: 12 September 2016

Member in charge: Mark Drakeford AM, Cabinet Secretary for Finance and Local Government

Assembly Committee responsible for Stage 1 scrutiny: Finance Committee

Stage 1 reporting deadline: 22 December 2016

The Land Transaction and Anti-avoidance of Devolved Taxes (Wales) Bill (‘the Bill’) was laid before the Assembly on 12 September 2016. The Bill was introduced in plenary by Mark Drakeford, the Cabinet Secretary for Finance and Local Government, on 13 September 2016.

The Bill is the first tax specific legislation to be introduced in the Assembly. It establishes provisions for Land Transaction Tax (LTT) in Wales, which will replace UK Stamp Duty Land Tax (SDLT) in April 2018. The Bill is the second in the series of three bills relating to the devolution of tax powers to Wales as stated in the Wales Act 2014.

The Bill follows the Tax Collection and Management Act (Wales) 2016, which received Royal Assent on 25 April 2016. The Act provided the legal framework for the future collection and management of devolved taxes in Wales and established the Welsh Revenue Authority (WRA), the body responsible for collecting and managing devolved taxes.

Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Bill – Bill Summary (PDF, 355KB)

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New Publication: Tax Collection and Management (Wales) Act 2016

27 July 2016

National Assembly for Wales Research Service

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

The Tax Collection and Management (Wales) Act 2016 (‘the Act’) provides the legal framework for the future collection and management of devolved taxes in Wales and establishes the Welsh Revenue Authority (WRA), the body responsible for collecting and managing devolved taxes.

Tax Collection and Management (Wales) Act 2016 (PDF, 837KB)

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Tax powers for Wales

16 May 2016

Article by Christian Tipples, National Assembly for Wales Research Service

This article is taken from Key issues for the Fifth Assembly’, published on 12 May 2016.

Wales will take control of its own taxes for the first time in over 800 years during the Fifth Assembly. What does this mean for Welsh taxpayers?

In 2018, Wales will receive the first tranche of newly devolved taxes. The Welsh Government will also acquire significant borrowing powers in this historic period. Such powers will give the new Welsh Government greater financial accountability that will require close scrutiny in the Fifth Assembly.

Which taxes are being devolved to Wales?

The Wales Act 2014 made provision for a range of taxes to be devolved to the Welsh Government. In April 2018, Wales will take control of Land Transaction Tax (LTT) and Landfill Disposals Tax (LDT).

Tax varying powers-01

What is being done to prepare for devolved taxes?

The Fourth Assembly passed the Tax Collection and Management (Wales) Act 2016 in March 2016. The Act establishes the Welsh Revenue Authority (WRA) whose main function will be to collect and manage devolved taxes.

The new Welsh Government is expected to introduce two tax-specific Bills soon after the 2016 Assembly elections to provide arrangements for implementing LTT and LDT.

How will Welsh taxes work?

1. Land Transaction Tax (LTT)

LTT will replace Stamp Duty Land Tax (SDLT) in Wales and will apply to both residential and non-residential property transactions. The major share of LTT will come from residential property transactions.

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In December 2014, the UK Government changed its approach to calculating stamp duty for residential property transactions by moving to a marginal rate system. This means each new SDLT rate will only be payable on the portion of the property value which falls within each SDLT band.

In its consultation document Tax Devolution in Wales – Land Transaction Tax the Welsh Government deemed this a fairer system for home buyers and proposed to continue operating the marginal rate system. However, the new Welsh Government will make the final decision and establish new tax rates and bands.

The UK Government also changed SDLT for non-residential property transactions (such as commercial property, agricultural land and development land) to a marginal rate system in March 2016. The new Welsh Government will need to determine how non-residential transactions are taxed when the LTT Bill is introduced in the Fifth Assembly.

2. Landfill Disposals Tax (LDT)

LDT will replace the UK Government’s Landfill Tax – a tax on disposing of waste at landfill sites. The new tax is intended to support the Welsh Government’s policies on climate change, waste, the environment and sustainable development. The Welsh Government will confirm tax rates nearer the introduction of LDT.

Will anything else be happening once taxes have been devolved?

The new Welsh Government will be given additional powers to manage its finances through a cash reserve and extensive borrowing powers.

3. Cash reserve

The Welsh Government will have access to a new cash reserve to help manage tax revenue volatility or support additional spending by providing a means for saving surplus revenues.

4. Borrowing powers

The Wales Act 2014 also includes new borrowing powers for the Welsh Government through either the National Loans Fund (NLF) or another lender. The new Welsh Government will be able to borrow from April 2018.

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Will other taxes be devolved in the future?

There are plans for devolving additional tax streams to Wales in the future. Timescales are unclear but there is potential for these taxes to either be fully devolved or start to be devolved during the Fifth Assembly.

5. Aggregates Levy

This levy is a tax on the commercial exploitation of rock, sand and gravel in the UK. The UK Government announced its intention to devolve the levy subject to the resolution of current legal challenges. The aggregates levy would raise £32 million if devolved in 2018-19 according to the Office for Budget Responsibility (OBR) forecasts.

6. Income Tax

The UK Government announced in the 2015 Spending Review its intention to remove the requirement to hold a referendum in Wales before partially devolving income tax. For each income tax rate, the Welsh Government is expected to collect 10 pence for every pound earnt over the personal allowance (up to £11,000 for 2016-17). The OBR forecasts that the Welsh Government would collect over £2 billion a year from Welsh taxpayers to spend on public services once income tax has been partly devolved.

Key sources

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