In an address to a conference in Cardiff Cairns praised the Welsh Assembly for progressive policies like the introduction of the presumed consent system for organ donation and carrier bag charges.

Cairns cited the devolution of tax powers as an example where the Welsh Government could demonstrate further innovation.

He said: ‘Not only will they make the Welsh Government accountable for raising more of the money they spend rather than continuing only as a spending department, they offer the opportunity to make Wales a low-tax Wales.’

Devolution presented ‘a chance to develop ambitious and innovative policies for Wales – not for the sake of being different, but to but to address the big economic and social challenges and deliver world class public services’, Cairns said.

In his autumn Spending Review statement in November, Chancellor George Osborne said that there was no longer a need to held a referendum for Welsh ministers to implement the Welsh Rates of Income Tax (WRIT).

The Wales Act 2014 allows the National Assembly for Wales to set a Welsh rate of income tax. It would only apply to income from earnings or other non-savings or non-dividend (NSND) income.  Welsh tax payers would no longer have to pay 10p in the pound of their NSND income to HMRC, and would instead pay whatever rate the Assembly sets.

The Assembly could apply different rates to different tax payers, but it could not adjust tax bands or tax allowances and reliefs.

The Welsh Government would keep any revenues raised by a Welsh rate of income tax. The Welsh block grant, determined by the Barnett formula, would be reduced by the amount the Treasury estimates it loses by no longer collecting 10p in the pound in Wales.

The vast majority of people living in Wales pay basic rate tax, and only 4,000 in 2014/15 paid higher rate tax.