What does the Welsh Tax Acts etc. (Power to Modify) Bill do?

Published 19/04/2022   |   Reading Time minutes

Senedd Committees are concerned a new Bill could mean the Welsh Government taking over functions that belong to the Senedd.

The Welsh Tax Acts etc. (Power to Modify) Bill was introduced to the Senedd on 13 December 2021 by the Minister for Finance and Local Government, Rebecca Evans.

We’ve produced a Bill Summary ahead of the debate on the general principles of the Bill.

The Bill allows the Welsh Ministers to amend primary tax legislation through regulations. The Senedd’s Finance Committee heard the Bill raises constitutional issues and concerns regarding the use of powers to make retrospective changes to tax legislation.

Powers in the Bill

The Bill proposes to give the Welsh Ministers new regulation-making powers to amend the three Welsh Tax Acts:

The Bill’s Explanatory Memorandum says the powers would be used to make urgent changes to the Welsh tax acts in response to four scenarios:

  1. to ensure the devolved Welsh taxes comply with international obligations;
  2. to protect against tax avoidance;
  3. to respond to changes made by the UK Government to ‘predecessor’ UK taxes (ones where Wales has an equivalent devolved tax) which affect, or may affect the amount paid into the Welsh Consolidated Fund;
  4. to respond to decisions of the courts/tribunals which could affect how the Welsh Tax Acts work.

Bill scrutiny

The Finance Committee and Legislation, Justice and Constitution (LJC) Committee have scrutinised the Bill.

The Finance Committee recognised that the Welsh Ministers need the ability to respond to external events to protect the overall resources available to the Welsh Government. The Committee questioned “whether the legislative mechanism proposed by the Welsh Government in the Bill is the best way to achieve this.”

The LJC Committee concluded “the Bill does not represent an appropriate legislative vehicle to make changes to the Welsh Tax Acts and it should be regarded as a short-term, temporary measure only”.

Key issues

Major concerns were raised about constitutional matters and retrospective legislation.

Sir Paul Silk, Chair of the Commission on Devolution in Wales (2011-14) said the Welsh Ministers would have powers to amend tax legislation through regulations which “would normally be reserved for primary legislation”.

Professor Emyr Lewis, Head of Aberystwyth University Law School, shared the same views saying the Bill goes against the UK’s constitutional structure where the executive “doesn’t have the power to raise taxes on the people without the permission of the Parliament”.

Another key concern is the proposal for the Welsh Ministers to make retrospective changes to tax legislation before an announcement being made. It was argued such powers would undermine the principle that law should be certain in its effect.

Professor Lewis said:

if the law can be changed retrospectively, then it means that something which was lawful at the time it was done can be made unlawful, and someone can suffer consequences which they would not have expected to suffer. That makes for uncertainty in the law.

Following the debate the Senedd will vote on whether to allow the Bill to proceed. You can watch the debate live on Senedd TV on Tuesday 26 April.

Do you want to find out more about the Bill? Read our Bill Summary.

Article by Christian Tipples, Senedd Research, Welsh Parliament