THE BLOG

Wales: Low Tax - High Aspiration

06/02/2014 13:15 GMT | Updated 08/04/2014 10:59 BST

The property-owning democracy was one of Margaret Thatcher's lasting legacies. In today's Wales of lower than UK average salaries and expensive rental markets; this legacy is becoming less and less of a possibility for many.

Last year, there were 13,000 house sales in the stamp duty bracket - £125,000 to £250,000. With house prices on the rise again, houses that fall in this bracket are no longer for the wealthy but for our aspirational and those wanting to get onto the property ladder. This dream has become more of a reality with the increase in 5% deposit mortgage offers and shared equity schemes, following the impressive lead of the UK Government. However, for many without the Bank of Mum and Dad or who already pay expensive rents prohibiting saving, the costs of that initial leap onto the ladder remain unreachable. Stamp duty pushes that dream further away. On average for a 10% deposit, stamp duty is significant contribution on top.

Therefore, the Welsh Conservatives are today pledging to abolish stamp duty on all property in Wales up to a value of £250,000. We want to make Wales a nation of home owners and a place of low tax and this is just one of the ways we can get there. We would like to do this today, but we need to wait until powers are devolved.

Within the next year, the Wales Bill - a UK Government bill which plans to devolve stamp duty to the Welsh Assembly - will be passed, enabling Wales to become a low tax destination. Since Welsh devolution began in 1999, GVA has fallen to 72% of the UK average and average wages and house prices lag behind other parts of the UK. All this whilst Labour has been at the helm of the Welsh economy for nigh on 15 years. In some areas of Wales, builders are now turning their backs on building here because of the cost of Welsh regulations and the lack of buoyancy in the market.

It is inevitable that some in Wales will query the need for such a move, but that's part of the lack of imagination, not lack of possibility.

In a report written in June last year, it is suggested that reducing stamp duty by just 1% can increase volumes 20 per cent over a very short period of time. At present levels, abolishing this band of stamp duty would cost the Welsh exchequer around £20 million. However, an increase in economic activity will increase tax takes.

The UK Government's announcement to support 30 of the 31 recommendations of the Silk Commission on further devolution shows the Conservative commitment to Wales being a low tax country as a means to driving entrepreneurial spirit and growing a Welsh economy that for too long has been at the bottom of the UK's competitiveness league tables.

Last week, a leading report showed significant evidence of 'brain drain' to London and the South East, with clear routes from all parts of the UK. Nowhere was the route more trodden than between Wales and London. We all know that the UK faces huge challenges in counter-balancing the huge pull of London, yet in the case of Wales very few actually return.

This requires radical policy and I believe that by sounding the horn of low tax, Wales could begin to reverse this decline. Becoming a place where people believe enterprise thrives and is actively supported. I believe the Welsh Conservatives are the only party to do that.

What an abolition of stamp duty would do is send a message to the strivers and the ambitious that they can be better off in Wales. It won't solve all problems, but nor do I pretend it will. Sometimes in politics, small changes can make very big differences.