A technical assessment of the potential for a Local Income Tax in Wales

Descriptions

Local authorities in Wales spend around £9 billion a year on the revenue costs of delivering services and around £1billion on capital investment. The funding system comprises £3.2bn in government support (revenue support grant), £2.7bn from locally raised property taxes (council tax and non-domestic rates), mechanisms for capital financing and an extensive governance and audit framework to ensure the proper use of public money.Domestic property is currently taxed as part of the existing council tax system in Wales. Council tax is charged on all homes and based on the value of the property as at the latest revaluation exercise in 2003.There are arguments the current tax is unfair and regressive with calls for reform and a Local Income Tax (LIT) being a potential option to address these issues. Recently, the Lyons Inquiry in England and the Burt Review in Scotland assessed the potential for an LIT. In 2015, the Scottish Commission on Local Tax Reform assessed possible new approaches to local taxation with detailed focus on an LIT.There are numerous countries which operate an income tax at a local level. The reliance on local government tax is much higher in some of these countries, such as Sweden, Norway and Denmark. It would be useful to know how an LIT would work in relation to the current tax system in Wales where there is a mix between local and national taxes.In light of the above, the Welsh Government wishes to understand the potential for an LIT in Wales. A detailed analysis should provide an understanding of the practicalities of moving to a form of LIT as a mechanism for raising revenue for local government services in Wales, as a potential replacement for council tax.The analysis required will include, but may not be limited to:•Undertaking an options review of the potential for Local Income Tax (LIT) in Wales as a mechanism for raising revenue for local government services.The objectives are to:•Appraise the options for an LIT in Wales;•Develop an understanding of the preparatory work that would need to be done to translate the conceptual options for an LIT in Wales into practical action, including any associated costs and barriers to implementation; and•Consider broadly the impact of an LIT in Wales on taxpayers.Prospective tenderers should be able to deliver on all of the analysis requirements above. They should be able to demonstrate access to any required datasets.The Welsh Government value of the contract will be around £20,000 to £24,999. The length of the contract will be six months initially.The purpose of this Speculative Notice is to:•Alert the marketplace to a prospective contract opportunity for the requirements set out above; and•Invite expressions of interest from suitable providers.The next stage of the process will be to invite quotations from interested parties through the Sell2Wales website. In the first instance, prospective tenderers should respond to this Speculative Notice to register their interest in this opportunity.NOTE: To register your interest in this notice and obtain any additional information please visit the Sell2Wales Web Site at https://www.sell2wales.gov.wales/Search/Search_Switch.aspx?ID=92182.