19 November 2012 Last updated at 09:23 ET

Silk report: UK government to 'seriously consider' tax proposals

Welsh Secretary David Jones (l) said the report from Paul Silk (r) would be taken 'very seriously indeed' by the UK government

Serious consideration will be given to a report calling for Wales to have its own tax system, the UK government says.

The Silk Commission's report says a referendum should be held on allowing the Welsh government to vary income tax.

Welsh Secretary David Jones said work would begin straight away to decide which, if any, of the report's proposals are introduced.

But he denied it was part of a slide towards ever greater devolution.

He said an analysis of the Silk report would start immediately and that his department had already spoken to the Treasury and First Minister Carwyn Jones.

The report says the Welsh and UK governments should share responsibility for income tax rates, but only if voters consent to the changes in a referendum.

The Conservative-Liberal Democrat coalition in Westminster promised to set up an inquiry into how the Welsh government is funded.

The Silk Commission began its work following the Yes vote in the referendum in March last year to give the assembly more law-making powers.

David Jones was asked if it was part of a "slippery slope" towards ever greater devolution.

But he said: "I don't think it can be suggested that there is anything that has been sprung upon the Welsh people. They were always aware that this was part of the process."

He hailed a "very thorough piece of work" from the all-party Silk Commission. Whitehall and Cardiff would look at the proposals "to decide which if any are appropriate to take forward", he said.

"We are taking it very seriously indeed," he added.

"It's a powerful piece of work which we will be giving very careful scrutiny to."

The Welsh government welcomed a recommendation to give it powers to borrow money.

First Minister Carwyn Jones said: "I have long argued that there would need to be a referendum before powers to vary income tax rates were devolved and I am glad to see that the commission has endorsed this view.

"We will look carefully at the proposal to move towards devolution of some powers over income tax - provided the people of Wales have the final say."

'Balanced'

At a press conference in Cardiff Bay, commission members repeatedly stressed they had produced a "balanced" report.

The commission's Labour member Sue Essex, a former Welsh finance minister, said: "This is not a pie in the sky thing we are talking about. It's possible, it's doable in Wales."

Her party's shadow Welsh secretary Owen Smith recently said that income tax powers "probably oughtn't be devolved right now" and warned they could leave Wales worse off.

After the report was published on Monday, he said it was right to recommend a referendum.

"In assessing those recommendations, we will need to test not only whether the proposals are in the financial interest of the Welsh people but also whether they pass the test of enabling an equitable and sustainable financial settlement for the whole of the UK," Mr Smith said.

Nick Bourne, the former leader of the Conservatives in the assembly who sits on the commission, said his party would get on board with the proposals.

"It's good for Wales, it's good for the United Kingdom. Why wouldn't they be comfortable with this?" he said.

Tory finance spokesman in the assembly, Paul Davies, said: "We believe that this5 is a comprehensive package of reforms to make the Welsh government more accountable for its decisions."

Welsh Liberal Democrat leader Kirsty Williams said: "We have been arguing for greater devolution for over a century. This is the latest step in our long campaign for a federal UK.

"It will strengthen Wales and help make a real difference to the lives of people across the country."

Plaid Cymru said the report does not go far enough.

Party finance spokesman Ieuan Wyn Jones said corporation tax should also be devolved - something the commission rejected unless the tax was devolved to Scotland and Northern Ireland.

"Currently we have little or no room to manoeuvre within the straightjacket of a block grant," Mr Jones said.

'Bureaucracy'

David Lermon, director of the Institute of Chartered Accountants in England and Wales, said: "We are more cautious about the recommendations relating to the partial devolution of income tax.

A referendum is recommended before income tax varying powers are devolved to the assembly

"They will inevitably introduce greater complexity and bureaucracy into the UK tax system, two qualities that the tax system already has in abundance."

The Federation of Small Businesses (FSB) applauded a call for the full devolution of business rates.

FSB Wales head of external affairs Iestyn Davies said: "It is now imperative that this recommendation is acted upon to pave the way for a fairer, more progressive and wide-reaching change for the business community in Wales."

The Electoral Reform Society suggested the current 60 assembly members might not be enough to scrutinise the Welsh government if it got tax powers.

Steve Brooks, Director of the Electoral Reform Society Wales, said: "We need a strong National Assembly that's able to hold the government's feet to the fire, and scrutinise how taxes are raised, public money is spent, and laws made."

Spencer Birns, head of commercial operations at Cardiff Airport, said: "The ability to control long haul air passenger duty rates is just one tool in the armoury we have to improve air passenger services to and from Wales and increase passenger traffic."

Source : bbc[dot]co[dot]uk