Hain, a former secretary of state for Wales, said the Conservatives were going back on a promise made in their manifesto to hold a referendum. While this was initially included in the Wales bill, they have now been dropped following an announcement by former chancellor George Osborne.

In his autumn 2015 spending review, Osborne said Control of some of the income tax levied in Wales can be devolved to the Welsh government without a referendum, which would mean the Welsh executive could control £3bn of taxes a year by 2020.

Osborne also said that spending per head on devolved services in Wales would not fall below 115% of spending per head in England.

Hain said: ‘The current Secretary of State for Wales, Alun Cairns, was a government whip and voted for the 2014 [Wales] Act which put into statute the necessity for a referendum just two years ago.

‘So why has he, and why have the government, done a U-turn after such a short space of time? Is he frightened that, if invited to vote, a majority – maybe a large one – in Wales would turn down the powers?’

Despite the pledge of a ‘funding floor’ for Wales, Hain argued that income tax devolution would place an additional burden on Welsh taxpayers.

‘Without a new “Barnett floor”, as first minister Carwyn Jones has insisted, it would be pure folly for Wales to have income tax devolved,’ he said.

‘Pooling and sharing the UK’s resources also enables redistribution from richer to poorer parts of the UK – like the coalfield communities of the South Wales Valleys. With around 40% of UK GDP concentrated in London and the South East of England, why on earth would Wales choose to cut itself off from that?,’ Haines argued. 

A spokesman for First Minister Carwyn Jones said: ‘We are hopeful that we can extract a good deal for Wales through the upcoming fiscal framework, if this is not forthcoming we’ll terminate our conditional support for the Bill.’

Separately, the constitutional and legislative affairs committee of the national assembly for Wales has criticised the Wales bill, saying it ‘is over-complicated, bureaucratic and will not deliver a lasting settlement.’

The committee concluded the proposed legislation ‘does not deliver greater parity with Scotland and Northern Ireland in terms of powers and responsibilities, and in fact introduces the possibility of rolling back the existing devolution settlement.’

In addition, CIOT has issued a warning about the Welsh government’s plans to introduce higher rates for its new Land Transaction Tax (LTT) which will replace stamp duty land tax (SDLT) in Wales from April 2018.

Legislative changes are already in preparation, and the institute says the switch from a ‘slab’ approach to a ‘slice’ approach for calculating the tax means the Welsh government is considering raising the high end rates of LTT.

John Cullinane, CIOT’s tax policy director, said: ‘We suggest that the Welsh government tread carefully when settling on bands for its new LTT to assess the risk of harming its tax take from property sales. If the effect is a fall in the volume of property transactions with a consequential reduction in revenue, there is then less money to spend on public services and it is then hard to see the changes as especially progressive.

‘We welcome the anticipation that the legislation will be reviewed on a regular basis given its significance.’

CIOT says tax changes which led to a static middle to top level of the property market would potentially be a problem for the Welsh government because its block grant from the UK will, broadly, be set presumptuously on what SDLT would have collected.

In 2014-15, £170m was raised from stamp duty land tax in Wales, with 55,000 transactions.