Welsh Labour considers raid on income tax

Welsh Labour is considering increasing income tax months after telling voters that the rate would not rise.

Mark Drakeford, the former Welsh first minister who is now finance secretary, said the changes would be looked at for the Welsh government’s budget in December.

Mr Drakeford said that “of course” income tax rises would be considered and added they could raise “significant amounts”, though he also expressed caution about going down that path.

He opened the door to the increase despite the Labour general election manifesto promising no increases in the rates of income tax - a pledge Sir Keir Starmer is still repeating.

The manifesto strictly applied to Labour’s approach to the UK Government, rather than that of the Welsh government – also run by Labour – which has some tax powers. There are separate Welsh elections to determine who runs the Welsh government.

But increasing the tax burden on “working people” could open up Sir Keir, the overall Labour leader, to accusations that the spirit of his promise is not being followed.

There is uncertainty about which taxes Sir Keir and Rachel Reeves will consider increasing in the Budget on Oct 30, with higher levies on wealth – such as capital gains tax and inheritance tax – not ruled out.

The Conservatives called on Labour to rule out any income tax rises in Wales, warning the move would be “punitive” and “hit people in their pockets”.

Mr Drakeford, who stepped down as first minister in March, was speaking to the Senedd’s finance committee ahead of the Welsh government’s budget on Dec 10.

According to the BBC, Mr Drakeford said on income tax: “We will look at it of course, as we always do, it is an important lever the Welsh government has.

“In the budget process there will undoubtedly be a cabinet debate about whether or not we should change the Welsh rates of income tax.

“There is every year, in my experience, particularly the toughest years.”

Mr Drakeford did go on to express reservations about a possible rise in the basic income tax rate, noting that anyone who earns over £12,500 would feel an impact.

He said he thought of people like a young woman in his constituency struggling to pay the bills on a “very, very modest income” when considering income tax rises.

But his position is different from Sir Keir, who has publicly spoken out about the burden of tax on working people being too high.

The Labour leader promised in his election manifesto not to increase National Insurance, VAT, income tax rates or the corporation tax rate.

Peter Fox, the Welsh Conservative shadow minister for finance, said: “Labour must rule out tax rises. An income tax increase would be a punitive measure that will hit people in their pockets.

“Coupled with Labour’s scrapping of winter fuel payments for most pensioners, a tax hike will compound the misery for people the length and breadth of Wales.

“At a time when Labour is embarking on pet projects like their basic income pilot or their plans to create 36 more politicians, the people of Wales will rightly see higher taxes as the wrong priority.”