Wales politics

Income tax cut and new property levy suggested by Adam Price

Adam Price
Image caption Adam Price: "We need to get a little creative"

Plaid Cymru would consider scrapping council tax and business rates if it forms the next Welsh Government.

Plaid leader Adam Price thinks replacing them with a new property tax could fund a 3p income tax cut and £300m a year extra for education.

He said Wales needs to invest more in education.

Mr Price said paying for it with an income tax rise could discourage graduates from returning to Wales after university.

He is seeking to demonstrate the party has bold and distinctive ideas as the Welsh election in May 2021 draws nearer.

According to the Wales Governance Centre council tax currently generates £1.4bn a year in Wales, business rates £1.1bn and each penny of basic rate income tax £190m.

In extracts from a speech delivered at the Workers Educational Association in Llanelli, Carmarthenshire on Thursday evening, Adam Price said: "£300m would represent around a 10% increase in education budget, which would be significant and a 1p rise in income tax would deliver that.

"But then why work or set up business in Cardiff, when you can do the same in Bristol at a lower rate of tax for yourself and your employees.

"So, we need to get a little creative.

"We could, for example, scrap business rates and council tax, both badly designed and unfair taxes in their own ways, and replace them with a new single property tax.

"We could aim for this tax to raise the same amount as the taxes it was replacing and say the equivalent of 4p in income tax allowing us to cut the rate of income tax by that amount if we wished, but cut it instead by 3p."

Image copyright Getty Images
Image caption 10p in each income tax band now goes directly to the Welsh Treasury to be spent on public services in Wales

The proposal to cut income tax is focused on the basic rate rather than the other higher rates. The suggestions are to be discussed within Plaid Cymru and are not party policy.

Mr Price suggested a 9p cut to the basic, higher and additional rates of income tax during his campaign for the Plaid Cymru leadership in 2018.

Under income tax powers that came into force last year, Welsh minsters can adjust income tax by 10p in every £1 for each band.

Labour has led the government in Wales since devolution in 1999, but in coalition with Plaid between 2007 and 2011 and the Liberal Democrats from 2000 to 2003.

The current Welsh Labour government includes a Liberal Democrat and ex-Plaid assembly member who now sits as an independent.

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