Like all Labour budgets, bad economic news and damaging proposals are often in the loan shark small print. Although to be fair to Alistair Darling, there was much bad news in the glaring headlines of this budget too.
Buried away in this budget were proposals which Andrew Davies, our Finance Minister, confessed not to know about, when I questioned him, the alteration of the tax treatment of self-catering accommodation operators in the United Kingdom. These proposals will have a devastating effect in Wales.
When I raised it with the Finance Minister he promised to discuss it with the Heritage Minister, Alun Ffred Jones, within whose portfolio Tourism lies.
I have just received a reply from the Minister. The relevant part of the reply indicates that we had to make alterations to our tax treatment because of European law. This is a complex area, which is also non-devolved. The Rules as they currently exist are likely to contravene European Law and therefore the Government has taken action to amend this situation. I am sure you will agree that we have to be fully apprised of the financial implications of this Treasury decision before considering any approach to the Treasury. Once we receive the industry’s assessment of the impact on tourism businesses, Welsh Ministers will be in a position to consider the situation and scope for challenging this decision.
This is quite true, but what the letter does not go on to say is that we could quite easily have altered the tax treatment of self-catering operators living within the United Kingdom who have property overseas to ease their tax position to bring it in line with the tax position on self-catering accommodation operators within the United Kingdom.
In short, all property let out on a self-catering basis, whether within the United Kingdom or overseas, could have been treated on a more lenient basis rather than a harsher basis.
I have written back to the Minister in these terms demanding that he stands up for Wales against this very damaging proposal. You are right to say that there was an issue of European Law involving these regulations, but what you do not say is that the rules could have been changed in such a way as to maintain the status quo and alter the rule in relation to overseas property held by people in Britain. The issue was one of inconsistency and it did not require the detrimental treatment that we are now seeing in relation to Welsh holiday self-catering businesses.
I would hope that you are going to take an extremely robust approach in relation to this because it is severely detrimental to self-catering businesses throughout Wales as well as the rest of the United Kingdom.