Welsh Tories would cut taxes for higher earners

The Assembly Opposition Leader is expected to say that he'd cut the 40% income tax rate if he were part of a future Welsh Government with tax-varying power. In a speech later, Andrew RT Davies is to say that cutting the rate for people who earn over £34,000 a year, would encourage business growth.

Welsh Conservatives say such a move would benefit 89,000 people who earn more than £34,000 a year and would cost between £12m-£16m. And they say it would complement UK Government efforts to make sure the lowest earners pay less or no tax.

Andrew RT Davies told me more about the proposals.

The Welsh Liberal Democrats have previously said they'd cut the basic rate by 2p. But any change would be a long time coming. Although the Silk Commission into further devolution recommends that part of income tax should be devolved, it says that should only happen if voters agree in a referendum.

But the move is significant even though it's speculative and acknowledged by Welsh Conservative insiders to be as much about political positioning as it is about economics.

They expect opponents to paint them as elitist for saying they'd focus cuts on higher rate tax payers. But Tories point out that people start paying that 40% at just £34,000 and that their coalition colleagues in Westminster are already making moves to ensure the lowest earners pay less or no tax.

Conservatives are unlikely to be in a Welsh Government in the near future and income tax power isn't going to be devolved soon. But, as one insider puts it, this is a 'clear blue water' statement, showing the Welsh Tories' centre-right thinking and sharpening debate about what devolution is for.

It's certainly sharpening debate about the proposals. Labour's two-pronged attack came first from Shadow Welsh Secretary Owen Smith who said:

And then from a Welsh Government source who added:

Plaid Cymru's leader Leanne Wood called the Conservatives 'irresponsible' and 'out of touch.'