20 November 2012 Last updated at 03:39 ET

Welsh tax powers: No plan for increase if power devolved, Carwyn Jones says

A firm with workers from Wales and England ponders a payroll headache

Assurances have been made that taxes would not simply be increased if Wales is given powers to control them.

A landmark report by the Silk Commission said powers to vary a range of taxes should be devolved.

But First Minister Carwyn Jones stressed the Welsh government did not want tax powers just to raise them.

"The whole point about getting taxes devolved is not to increase them, it's on occasion to decrease them as well," he said.

The Silk Commission report also calls for a referendum to allow the Welsh government to vary income tax by 2020.

The changes would make the Welsh government responsible for raising around a quarter of its own budget.

Peter Black, Liberal Democrat assembly member for South Wales West, said the proposals would be empowering but ensured Welsh government "did not try to do too much too soon".

"We have to learn to walk before we run and that means the Welsh government has to get used to dealing with taxation issues and learning how to use the powers which would come with that," he said.

Shadow Welsh secretary Owen Smith said there was now a need to think about the "long term benefit for Wales" and the whole of Britain.

"I believe in our being able to reallocate resources across Britain in order to create a more equal, equitable, fair society, he told BBC Radio Wales.

"I don't necessarily think that just dealing with our own problems... would be good for Britain."

'Music to my ears'

Conservative MP Glyn Davies told BBC Radio Wales it was an "important move forward".

While Plaid Cymru AM Lord Dafydd Elis-Thomas described parts of the report as "music to my ears".

He said it begins to put Wales in an international context and points out that as a nation it is the only devolved administration that does not have "proper tax varying powers".

"This is the first time that all the fiscal aspects, that is everything to do with finance of devolution have been properly studied," he said.

Since 1999, most of the devolved administration's budget has come in an annual block grant from the Treasury, currently worth more than £15bn.

Analysis

Sarah Dickins BBC Wales economics correspondent

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It's about a toolkit for a future government being able to carve out a better economy.

It's surprising that corporation tax isn't in there as it was used heavily by Ireland to attract inward investment.

And it's surprising that income tax is in there, because that's not something central government devolves as early as this.

If this happened, an optimist would say it could raise £2bn from income tax and £1bn from business rates to be able to do something in terms of giving extra grants or facilities for enterprise zones, or boosting the high street.

If you're a pessimist, you'd say if the economy went down further there's be less money coming in from income tax, less money from business rates and we'd be worse off.

It is risky territory but powerful territory as well - so it's about optimism or pessimism.

And Mr Jones said tax revenues would give the Welsh government an income which it can use to borrow money for big projects, such as improvements on the M4.

"Now that doesn't mean that you increase the taxes, but it means you take the taxes over and that of course means you have the money coming in in the first place," he said.

"But it's certainly not the intention to gather these powers and then increase them straight away. That certainly wouldn't be the intention of any government I would hope."

The report says before any referendum happens, some smaller taxes should be devolved first.

These include the stamp duty paid by house buyers, air passenger duty on long haul flights and the aggregates levy faced by businesses that quarry sand, gravel and rock.

But the Mineral Producers Association (MPA), which represents quarrying firms, warned any increase in the £2 a tonne levy on their industry could make Welsh facilities uncompetitive.

'Extra revenue'

MPA spokesman David Harding said: "We don't have a fundamental objection to the aggregates levy being collected by the Welsh government.

"Our fear is that given that they will be seeking to increase extra revenues, the temptation will be far too great to increase the levy.

"As far as we are concerned that would be bad for Welsh business and bad for Welsh jobs. Increasing the levy at this point when our industry is on its knees would be like kicking someone when they were down."

Bristol Airport warned allowing the Welsh government to cut air passenger duty on flights from Cardiff "could have a complex, dramatic and damaging effect" and could break EU rules on state aid.

The airport's chief executive Robert Sinclair said: "Politicians in London and Cardiff should be under no illusions that, if implemented, this recommendation would jeopardise jobs, connectivity and growth in the south west, with no net benefit to UK plc."

However, Mr Jones said it was entirely appropriate for the powers to be devolved and that "it certainly isn't against EU law".

Employers' group the CBI welcomed another Silk recommendation to give the Welsh government full control of business rates.

CBI Wales director Emma Watkins said "that consistent business rates across the UK provide certainty for business and business rates must not price businesses away from Wales".

The UK government, which set up the Silk commission, said it would give serious consideration to its proposals.