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The leader of the Welsh Liberal Democrats says they would lower the basic rate of tax from 20% to 18% if Wales was given tax varying powers.

Kirsty Williams is urging the move on the 150th anniversary of the birth of the last Liberal Prime Minister, David Lloyd George.

She says it fits in with his principles of a fair tax system.

The Silk Commission proposed that the Welsh government should have the power to vary income tax by 2020.

In a report released last November, the commission also said a referendum should be held and control over other smaller taxes should also be devolved.

Mrs Williams said that if Wales were to be given income tax varying powers, the Welsh Liberal Democrats would want to lower the basic income tax rate to make the tax system fairer and continue Lloyd George's progressive and Liberal principles.

She told ´óÏó´«Ã½ Radio Wales: "We're the first to admit that that's a considerable amount of money to raise and it would be in the radical tradition of David Lloyd George.

"One of the things that Lloyd George was renowned for was a progressive taxation system that looked to not tax things that society considered good ie having a job, earning an income, and to move taxes onto aspects that society considered bad such as polluting the environment.

"So you could have a switch round of taxation so that you were encouraging and helping people who were working hard."

The move would take around £360m out of Welsh coffers and save the average Welsh worker £750 a year.

Mrs Williams said she would want to use environmental taxes to make-up the shortfall.

She admitted they would not be able to tax petrol and diesel or raise the entire £360m, but said the Welsh assembly would have powers over aggregates tax and potentially air passenger duty.

"But we think what's important both at the UK and Welsh level is to have a tax system that's progressive, that helps the people on the lowest income and actually makes for a stronger economy.

"And what you could see in Wales is huge benefits to the economy if people had more of their own money to spend," Mrs Williams added.

But the power to vary income tax will only be devolved if London and Cardiff agree and if the public support the move in a referendum.