The Finance Committee undertook an inquiry into the implementation of the Wales Act 2014 and the operation of the Fiscal Framework. The inquiry will also consider public awareness of fiscal devolution and taxation in Wales.

The Committee published its report (PDF, 2MB) on 2 February 2021. The Committee received responses from the Welsh Government (PDF, 208KB) HM Revenue and Customs (PDF, 106KB) and the Senedd Commission (PDF, 211KB).

Terms of Reference
Taxation

• The Welsh Government’s tax principles, whether these have been met and whether the current tax regime and proposed new taxes align with these principles;
• How successful the administration of Welsh taxes and the Welsh Rates of Income Tax has been;
• What possible future tax changes could look like and what scope there is for a different approach to taxation in Wales;
• How the mechanism for devolving powers for new Welsh taxes has been performing.

The Fiscal Framework

• Consider the fiscal framework processes and how funding is allocated to the Welsh block grant;
• Examine the application of the Barnett Formula and the criteria for excluding specific funding from the formula;
• Consider the block grant adjustment mechanism and the effectiveness of the adjustment model;
• Review the suitability of the budget management tools such as the Wales Reserve, and the ability to borrow;
• Evaluate the treatment of spill-over effects and the mechanism for agreeing these effects;
• Draw comparisons between Wales and other international fiscal frameworks.