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Ministers are asking for public input on the future of tax legislation as a deadline approaches for the expiry of temporary powers granted to the Welsh Government.

Mark Drakeford, Wales’ finance secretary, said current powers to rapidly amend tax law in response to UK budget or court decisions will lapse in 2027 under a “sunset clause”.

In a statement on the future of tax-making powers, the ex-First Minister revealed the Senedd may be asked to vote on extending a temporary law until a permanent fix is found.

Prof Drakeford pointed out it is less than a decade since Wales gained new tax powers for the first time in hundreds of years, with land transaction tax replacing stamp duty in 2018.

He told the Senedd: “It is not surprising, therefore, that we continue to grapple with some of the practical ways in which those powers can best be discharged.”

‘Need for speed’

He said the Welsh Government’s green paper, which includes options rather than firm plans, will be a starting point in the conversation – helping to shape more specific proposals.

Prof Drakeford explained current powers, under the Welsh Tax Acts (Power to Modify) Act 2022, end in September 2027 and can be extended to April 2031 at the latest.

He told Senedd Members: “The green paper asks if it would promote stable governance if that extension were to be voted upon in this Senedd term… to allow an incoming government sufficient time to complete the exercise that this green paper begins.”

During his statement on September 16, he stressed the need to respond quickly to changes to “predecessor” UK taxes, like stamp duty, with the risk arising at every UK budget.

The green paper explores options including an annual Welsh finance bill, an occasional tax bill, a new ‘power to modify’ law or relying on slower mechanisms that predate the 2022 Act.

‘Far-reaching consequences’

Whichever path is taken, the paper suggests a similar mechanism to the UK’s Provisional Collection of Taxes Act will be required. This would allow a change to take near-immediate effect after being announced, preventing forestalling, with the full law passed later.

Land transactions tax and landfill disposals tax have raised more than £2bn to fund public services so far while the partial devolution of income tax has raised more than £15bn.

The Conservatives’ Sam Rowlands said: “What’s been proposed for consideration in this consultation could be beyond just an administrative tidy-up; it’s a move that could have far-reaching consequences for the clarity, stability and transparency of Welsh tax policy.

“Ultimately, it raises a very simple question… about how much scrutiny that process of changing tax laws in Wales will be subject to.”

Plaid Cymru’s Heledd Fychan welcomed the consultation, which runs until November 28, urging ministers to learn from international examples like the Basque economic agreement.