Commentary on Sections (and Schedules) Part 2: Finance Section 12: Referendum about commencement of income tax provisions
126.Sections 12 and 13 allow a referendum to be held in Wales about whether the income tax provisions, set out in sections 8 and 9, should come into force. Section 12 requires a draft Order in Council causing a referendum to be held to be approved by both Houses of Parliament and by an Assembly resolution, passed by not less than a two-thirds majority of AMs (i.e. at least 40 AMs voting in favour). If the Assembly passes a resolution calling for a referendum (again by at least a two-thirds majority), section 13 requires that a draft Order in Council be laid, or the Secretary of State must explain the failure to do so. The income tax provisions would be brought into force by HM Treasury order, made under section 14, if the majority of voters in a referendum vote in favour.
127.The procedure set out in these sections is similar to that in sections 103 and 104 of GOWA 2006, which allowed for a referendum in respect of the “Assembly Act provisions”(3) in that Act to come into force. The sections implement a recommendation made by the Silk Commission in its first report(4) that the devolution of income tax should be subject to a referendum in Wales. The Silk Commission also recommended that provision for such a referendum should be contained in an Act which introduces tax and borrowing powers for Wales, and further suggested the procedure which brought the Assembly Act provisions into force as an appropriate model(5).
128.Subsection (1) of section 12 permits Her Majesty by Order in Council to cause a referendum to be held in Wales about whether the income tax provisions should come into force. If a majority of voters in a referendum vote in favour, subsection (2) provides for the provisions to come into force in accordance with section 14 (see below).
129.Subsection (3) makes clear that a majority of voters in a referendum voting against the income tax provisions coming into force would not prevent subsequent Orders in Council under subsection (1) from being made.
130.Subsections (4) and (5) stipulate that a recommendation to Her Majesty to make an Order in Council can only be made if the draft Order is approved by both Houses of Parliament and by at least a two-thirds majority in the Assembly.
131.Subsection (6) specifies that a draft Order in Council can be laid in Parliament or the Assembly only once the Secretary of State has undertaken such consultation in respect of the draft Order as he or she considers appropriate. Such consultation would likely include, but not be limited to, the Welsh Government and the Electoral Commission.
132.Subsection (7) signposts further detail about a referendum in Schedule 1 (see paragraph 138).