The Treasury has confirmed that Wales will be able to set its own landfill tax, but will receive correspondingly less money from the UK Government.
Prime minister David Cameron said earlier this month that powers to raise a number of taxes, including for landfill, would be devolved to the Welsh Government.
In a response to recommendations by the Commission on Devolution in Wales, the Treasury said it accepted devolution of some tax-raising powers “with a corresponding deduction to the block grant”.
It added that Wales would need to agree formal arrangements – such as a contract or accompanying service level agreement – with whatever body administers the tax.
The Treasury said devolved landfill tax would “ensure the Welsh government has an independent funding stream to pay back the money it borrows”.
Wales is also to be granted a “cash reserve and limited current borrowing powers” to help it administer the new taxes.
Along with other devolved taxes, ability to create new taxes and new borrowing powers Wales will gain around £3bn in revenue, the Government said.
Treasury chief secretary Danny Alexander said: “The package of financial powers we have published today will be a powerful tool, bringing greater financial accountability and transparency to the Welsh government. This is a good outcome for Wales.”
Secretary of state for Wales David Jones said: “These new powers will make for more accountable government for the Welsh people.”
Scottish finance secretary John Swinney recently said landfills in Scotland will be taxed as much as in the rest of the country.
During the debate on the Landfill Tax (Scotland) Bill on 29 October, John Swinney said: “I am minded to set the tax rate for the Scottish landfill tax at a level no lower than that for the rest of the UK to maintain stability and to provide certainty to companies operating in the sector.”