THE DRAFT WALES BILL

Plaid Cymru has responded to the publication of the Wales Bill by pledging to table amendments that would preserve the integrity of the Silk Commission’s recommendations on devolving further powers to Wales.

Hywel Williams MP, who sat on the Welsh Affairs Committee scrutinising the Draft Wales Bill, expressed disappointment that the UK Government had “cherry-picked” some Silk’s recommendations and that his party would seek to put this right so that the transfer of new fiscal powers will bring maximum benefits to the Welsh economy. Mr Williams added that any votes on the amendments would be “a test of Labour’s priorities” given the clear split in opinion between the party’s members in London and Cardiff over granting Wales more job-creating powers

Speaking shortly after the Bill was published, Hywel Williams MP said:

"Plaid Cymru has been united and consistent in making the case for the transfer of job-creating and economy-boosting financial powers from Westminster to Wales.

"We therefore welcome the publication of the Wales Bill that will seek to implement some of the recommendations of the cross-party Commission on Devolution chaired by Paul Silk.

"However, our goal from the start has been to preserve the integrity of the Commission's original recommendations and it is disappointing to see that they have been cherry-picked in this way.

"We will aim to put this right by tabling amendments to the Wales Bill with a view to scrapping the lockstep - a roadblock that would limit the Welsh Government's income tax-varying powers and was not part of the original recommendations. We will also seek to amend the Bill so that Air Passenger Duty is devolved to Wales as per the Silk Commission report.

"Having labelled the lockstep a "Tory trap" and having bought Cardiff airport, it would be a huge embarrassment for the First Minister of Wales - as the most powerful member of the Labour Party in the UK - if he fails to convince Labour MPs in Westminster to support these amendments which are so crucial to boosting the Welsh economy.

"The Wales Bill will therefore be a test of Labour's priorities.

“Overall, the Bill represents a lost opportunity to include the recommendations of the second report of the Silk Commission which indicated that wider powers such energy, transport, and policing should be transferred to Wales. There is plenty of time in the parliamentary calendar given that the Coalition Government has run out of substantive things that they can agree on to legislate. We could have had a full and comprehensive Wales Bill.”

A QUESTION OF STATUS?

When it comes to tax, most of us pay it and most of us probably pay our fair share, and even a proportion of corporations (multi-national or otherwise) end up paying some degree of tax - despite the best efforts of creative accountants. The question of what exactly is a corporation and how much tax it should pay came before the House of Commons Public Accounts Committee (last month) in relation to the Duchy of Cornwall.

The Duchy of Cornwall, the Committee heard, provides the heir to the throne was a private income,  was not a corporation and that the prince voluntarily pays income tax. The Duchy of Cornwall, despite the name, happens to have significant landholdings well to the east of the Tamar which included the Oval Cricket Ground in London and a third of Dartmoor, not to mention pretty extensive property in Cornwall itself.  It is worth noting that the "title and honour" confers legal prerogatives in Cornwall which elsewhere belong to the Crown including for example the right to the property of people who die without heirs and ownership of the foreshore. Interestingly the duchy estate is worth some £762 million pounds.

A Royal aide revealed that the prince's estate does not pay capital gains tax because he "doesn't have access to the capital gains. The capital gains are all reinvested in the duchy for future dukes". MPs were that the profits were used to pay for the prince's public duties, as well as those of his wife the Duchess of Cornwall and those of Prince William, the Duchess of Cambridge and Prince Harry and that if parliament legislated to prevent Prince Charles using his private income in this way it would cost taxpayers more - to pay for his official duties - and he would be free to spend his money "on his other things".

A senior Treasury official told the committee, that the prince's tax arrangements worked this way because he does not pay capital gains tax because he always reinvests any profit from sales, and that "If the duke were to be taxed on the corporate income of the duchy as well as his income, he would be taxed twice."  The Treasury official also stated that the duchy differed to other corporations because the prince "is in the unusual position of getting all the income." The duchy estate of land and property - mostly in the south-west of England - was established by King Edward III in the fourteenth century to provide a private income for his son and heir to the throne.

The last time Prince Charles's representatives came before the Public Accounts Committee they were accused of performing financial "jiggery pokery" and he was said to be the recipient of the "best housing benefit scheme in the world".  The committee was fresh from finding the tax affairs of Google, Starbucks and Amazon wanting. Earlier this month, the prince faced calls from Andrew George, the Liberal Democrat MP for West Cornwall, to "come clean" about the Duchy of Cornwall's tax arrangements. Clarence House has said public funding for the Prince of Wales fell by £1 million to £1.2 million pounds in the last financial year, out of a total income of £20.2 million.

TAX EVASION.GOV.UK?

Most of us pay tax, one way or another and indirectly via democratic elections we have some form of impact on the way tax within these islands is set, collected and spent. Some people, who hold directorships of companies based or operating in tax havens, also as Peers and MPs, hold office within the UK Parliamentary system and can have impact and influence on the UK Tax system. This surely is a blatant conflict of interest and should not be acceptable anytime, let alone during a recession.

A full list of 68 UK Peers and MPs with directorships or controlling interests in companies linked to tax havens has been published by the Guardian (21.09.2012). It appears that some of the UK’s Parliamentarians who are able to influence tax laws have positions as directors and non executive directors in major companies with offshore links. There are 27 Tories - six of whom are MPs – 17 Labour peers, three Lib Dem peers and another 21 are either crossbench or non-affiliated peers.

The Guardian examined the Parliamentary registers of members' and Lords' interests to identify companies where Parliamentarians are registered as directors or a non-executive directors. They then cross-referenced this with accounts or other financial records to find out if the companies were registered, or had a parent company or subsidiary, in a jurisdiction known as a tax haven.

Tax havens tend to be masked by secrecy and low taxes, and there have been few attempts to identify them. UK Revenue and Customs does not provide a list of tax havens. While there is nothing wrong with a company being based in a tax haven does not necessarily mean that a company is avoiding tax or taking advantage of the secrecy that tends to surround tax havens, even if the tax jurisdictions are closely associated with tax evasion.

Across the pond, in America, there has been a great deal of ongoing irritation with tax evasion, back in March 2009, the 111th US Congress (2009 – 2010) brought in House Resolution 1265 (111th): Stop Tax Haven Abuse Act, which aimed to restrict the use of offshore tax havens and abusive tax shelters to inappropriately avoid Federal taxation, and for other purposes., it originally died (was referred to committee). Yet this issue won’t go away, the bill was reintroduced as HR 2669 on July 27th 2011 and again referred to committee and the report stage is awaited.

One of the things the bill did was list the 34 states and dependent territories seriously involved in tax evasion.

1) Anguilla.
2) Antigua and Barbuda.
3) Aruba.
4) Bahamas.
5) Barbados.
6) Belize.
7) Bermuda.
8) British Virgin Islands.
9) Cayman Islands.
10) Cook Islands.
11) Costa Rica.
12) Cyprus.
13) Dominica.
14) Gibraltar.
15) Grenada.
16) Guernsey/Sark/Alderney.
17) Hong Kong.
18) Isle of Man.
19) Jersey.
20) Latvia.
21) Liechtenstein.
22) Luxembourg.
23) Malta.
24) Nauru.
25) Netherlands Antilles.
26) Panama.
27) Samoa.
28) St. Kitts and Nevis.
29) St. Lucia.
30) St. Vincent and the Grenadines.
31) Singapore.
32) Switzerland.
33) Turks and Caicos.
34) Vanuatu.

Now oddly enough more than a few of them are UK Crown Dependent territories. A couple of months ago the Treasury Minister David Gauke said that it was "morally wrong" to pay tradesmen such as plumbers, builders and cleaners in cash in the hope of avoiding tax. He said that the practice came at "a big cost" to the Treasury and meant other people had to pay more to help balance the books. The Westminster government may have highlighted this in its desire to clamp down on tax avoidance, the problem is that it will hit those who can least affords to tax evade.

US President Obama was 100% right to suggest that the governments of the world should jointly tackle the issue of tax evasion and tax havens. By tackling the tax havens, the tax avoidance and the questionable dealings of the derivative traders, hedge funds and the off balance sheet trading then we might go so way towards dealing with the consequences of the worldwide financial crash. However, I suspect that nice Mr Cameron and the other 18 millionaires in the cabinet will do nothing to close the tax loopholes – so much for all of us  being in it together? Hmmm...over to you George...perhaps not!

FOR WALES SEE...

At the moment Scottish and UK government ministers are busy discussing proposed new financial powers for Scotland. Treasury Minister David Gauke and Scottish Finance Secretary John Swinney have been taking part in the first meeting of the joint exchequer committee.

The Committee will look at the financial implications of the Scotland Bill, which is currently going through the Westminster parliament. The SNP have understandably said that answers are still needed over the planned tax changes.

The Scotland Bill will devolve £12 billion pounds of new tax and borrowing powers under plans which will see Scotland control a third of its budget. At the heart of this important piece of legislation is a recommendation that Scotland should take charge of half the standard income tax rate - 10p (with a corresponding cut in the block grant Scotland gets from the Treasury).

UK Con Dem ministers have said that the powers within the bill mean Scotland, with its annual £30bn budget, will have more accountability for the money it spends. The Scottish government, however, wants to cut the headline rate of corporation tax, paid through company profits, from 23% to 20% would create an extra 27,000 jobs over 20 years. UK ministers have said that any case to devolve corporation tax to Scotland would need to be strong. So the debate goes on...

Meanwhile in Wales...Carwyn‘s formerly New Labour lot have asked for nothing. Now if its offered, whatever it is (Corporation Tax variation, a better fairer financial settlement, control of criminal justice, etc) then they will take it, especially if it's offered to Northern Ireland and Scotland, but they won't ask for it?

Now I don’t believe for a moment that this stance is down to pride, its merely a lack of any real belief in the devolution project in Wales or any belief in Wales for that matter save for political expediency. They (Labour) may actually believe or at least pay lip service to the idea that Labour in power in Westminster will actually deliver for Wales.

Yet oddly enough they didn't manage to deliver when in power last time (between 1997 and 2010) nor have they previously so why should they in the future? So much for standing up for Wales...perhaps not?

BRIDGES OR BANKERS?

Tuesday 5th January 2009 - which means that for 4 days commuters, travellers, businesses and visitors to Wales have had to fork out yet more money to do business within Wales and beyond. I was talking to someone today who told me that they could recall paying the princely sum of twelve and half pence to cross the old Severn Bridge in the mid 1970's - what price the £5.50 per car we pay today.

Looking beyond the immediate teeth grinding impact of yet another annual increase in the Severn bridge tolls, there is another issue – one that is beginning to become worth considering, what’s going to happen in 2014, when it has been estimated that the PFI contract will have been covered by toll receipts. Who actually is going to own the bridge (or bridges) and will they stop collecting the tolls?

If not then the bridge (or bridges) sit on the border - but the toll on the newer bridge is collected in Wales, the older one being collected in England - so will the bridge and the tolls simply revert back to the Department of transport? Or if perchance it comes down to the National Assembly, by default or as a result of central government indifference, then does the National Assembly act as merely an agent for the Department of Transport or does it end up with a measure of a degree of freedom of action?

With that thought in mind, what choices could be made - something that might be worth considering is that if the current tolls were halved then, what could be accomplished by using a percentage of the remaining toll fees to cover ongoing maintenance of the bridge and what could be accomplished by using the remainder of the toll for ring fenced capital projects – such as new integrated transport systems, reopening railway lines, funding tram systems and investing in rail freight – which would be far more beneficial for all of us in Wales than any of the future toll fees disappearing into the Westminster coffers merely to help to bail out the bankers?