Fiscal report poses a political challenge

THE latest Wales Fiscal Analysis report from Cardiff University’s Wales Governance Centre poses challenges both to those who would like Wales to be an independent country and to those who want it to remain part of the UK.

Official figures show that the percentage difference between the tax raised in Wales and the amount of public spending in the country has reduced from 24% to 19.4%.

Unfortunately the reduction cannot be attributed to an increase in Income Tax revenue, which would indicate a prosperous economy, but to austerity spending cuts.

It is shocking that the Income Tax take in Wales remains lower than it was before the recession a decade ago. This gives the lie to the triumphalism of those politicians who claim that the large number of

jobs that have been created signifies a growth in personal and community prosperity.

The fact is that too many of the jobs created are low-paid and parttime, in contrast to the relatively well-paid jobs that have been lost.

There must be cause for concern that more revenue is raised in Wales from VAT than from Income Tax.

VAT is a regressive tax payable on goods and services without regard to income. It means that poorer people in Wales are paying a higher proportion of the money they have in tax than their counterparts in England.

The authors of the report make the point that the policy and spending programmes of an independent Welsh Government would be significantly different from those of the present UK Government.

Yet they acknowledge that the statistics they have compiled should inform debate about the merits of independence.

The figures demonstrate that those advocating independence need to come up with a detailed case which argues the case convincingly.

Wales’ Income Tax base is woefully low and needs to increase significantly.

Will political parties – and particularly Plaid Cymru – be able to put forward an imaginative and innovative set of proposals that could transform the Welsh economy and help people get better-paid jobs?

But unionist parties also need to step up to the plate. There is little evidence to back up their view that Wales has thrived within the UK, in which London dominates as no other European capital does.