Labour to hit Welsh workers with a £1,084 tax bombshell
Labour plan to hit Welsh workers with a £1,084 tax bombshell if they hold onto power after May’s Senedd election.
Proposals to hike income tax and council tax for Welsh workers, plus new taxes on drivers parking at work and using trunk roads, would hammer the incomes of hardworking people and do nothing to help with the cost of living in Wales.
Welsh Conservatives have calculated that each working adult could pay up to £1,084 a year under Labour.
This is made up by a potential increase of 1% in the basic rate of income tax (£138), increase in council tax (£32), a parking levy (£424) and new road tolls for driving to work (£490), based on 1.39 million working adults.
These staggering costs could increase when Labour consider the introduction of other taxes such as social care and tourism that would hit Welsh staycations.
Commenting on the “reckless” and “devastating” tax plans, Welsh Conservative economy spokesperson, Russell George said:
“Labour’s tax plans are reckless and will be devastating for hardworking Welsh people.
“After the most difficult 12 months peacetime Wales has ever experienced, we need to be helping families, workers and businesses get back on their feet – not taxing them to high heaven.
“Labour’s plans would hold back our economic recovery and hit people where it hurts most – in the pocket with a £1,084 tax bombshell – spelling disaster for Wales.
"This is a double whammy from Labour who have caused Welsh workers to already miss out on £2,600 a year, compared to the pay of Scottish and English workers.
“We need to turn the page after 22 years of Labour, and only the Welsh Conservatives have a plan to build a stronger economy and a better Wales, without introducing new taxes.”
Notes
Increasing Income Tax
In their 2021 Senedd election manifesto, Welsh Labour have stated that they will “not take more in Welsh rates of income tax from Welsh families for at least as long as the economic impact of coronavirus lasts.” Therefore, not ruling out an increase in income tax once the economy has recovered.
Previously, during his time as Finance Minister, Mark Drakeford said, "I don't think we have by any means written off the idea that if you did need to raise money that might be a preferable, more practical route" in relation to increasing the basic rate of income tax.
The Welsh Government has also admitted that income tax will have to rise for basic rate taxpayers so that they would be able to get the most out of income tax.
Furthermore, a 1p change in 2020/21 would increase the Welsh Government budget by £192 million.
Introducing a Social Care Tax
In March 2018, Mark Drakeford stated the “time had come” for a new tax on people’s income to fund elderly care.
In October 2018, the Welsh Government confirmed that a Social Care Levy was “a key priority for the coming year”.
An independent report by Professor Gerald Holtham, commissioned by the Welsh Government, explored the possibility of a social care fund, which would see 20-30 year olds paying 1% of their yearly income. This would rise to 3% for the over-60s.
As recently as March 2021, the Welsh Government Health Minister stated that "the implication of not increasing taxes is we cannot raise or redirect resources to improve social care in the way we would have liked to have done through the social care promise.” Vaughan Gething previously said that "In all of these you can't get away from not just what we want, but also how much are we prepared to pay and by what mechanism."
The Welsh Government has said that spending on social services could rise to £400 million by 2023.11
Increase in Council Tax
Welsh Government figures show that the average Band D council tax in Wales was £1,731 for 2021/22; in 2020/21 it was £1,667.13 This represents an increase of £64. Assuming that Council Tax under Labour will continue to rise at the same level for 2022/23, and assuming two people per household, the increase would be £32 per year.
Trunk Road Charging
In the Welsh Government's consultation on their proposals in the Clean Air white paper, they propose the “creation of a new standalone charging regime for trunk roads through the Clean Air Act and the creation of a regulation-making power”.14 The white paper links the UK Government’s Clean Air Zones with new powers for local authorities and the Welsh Government to create charges for roads to reduce pollution.
The independent Review of Road Charging in Wales, once again commissioned by the Welsh Government, cites Labour-run Cardiff Council’s £2 proposals for non-residents to drive into the City. The aim of the charge would be to tackle climate change, reduce congestion, improve air quality and provide ring fenced funding to invest in public transport initiatives.
Assuming that an adult drives to work five days a week, for 49 weeks of the year (52 minus statutory annual leave) and is charged £2 a time to use the trunk road it could cost up to £490 a year.
Charging to park at work
In 2019, the Labour Member of the Senedd Jenny Rathbone held a Member’s debate to introduce a parking levy. In his response to the debate the current Minister for Economy and Transport, Ken Skates MS, stated the member had cited the “excellent example of Nottingham, where local leadership has led to the successful implementation of revenue raising workplace parking levies, which have been transformational”. In a vote on the proposal, the Welsh Government chose to abstain, rather than rule out such as parking levy.17
The independent Review of Road Charging in Wales, once again commissioned by the Welsh Government, estimated that 26,000 workplace parking spaces would pay a charge of around £424 per annum.
