The government has published details of plans to devolve financial powers to Wales which could see the Welsh government in charge of £3bn of tax revenue, including control of business rates, the ability to create new taxes and some borrowing powers.

The proposals are contained in the coalition's response to the Silk Commission's recommendations on financial devolution in Wales, which sees the UK government accept all but one of the ideas put forward.

As a result, the Welsh government will take on full responsibility for non-domestic business rates raised in the region. Wales will also have the ability to create new taxes with the UK government's agreement and to manage these new tax powers.

Danny Alexander, chief secretary to the Treasury, and David Jones, secretary of state for Wales, announced the creation of a cash reserve that the Welsh government can add to when revenues are high, and utilise when revenues are below forecast, in addition to limited current borrowing powers if there is insufficient funding in the cash reserve to deal with revenue shortfalls.

These further devolved financial powers follow on from earlier announcements about the devolution of landfill tax and Stamp Duty Land Tax in Wales, and plans to give the Welsh government access to limited borrowing powers so it can fund infrastructure investments including improvements to the M4.

The Welsh Assembly is also given powers to hold a referendum so that the people of Wales can decide whether some of their income tax should be devolved.

Alexander said: 'The package of financial powers will be a powerful tool, bringing greater financial accountability and transparency to the Welsh government. These new powers will make for more accountable government for the Welsh people. It is now up to the Welsh government to seize this once in a generation opportunity - to drive forward Wales' economic development and to use this opportunity to secure the growth and prosperity that Wales so desperately needs.'