Wales will be given greater financial powers, David Cameron has indicated ahead of a "major announcement" on the next stage of devolution tomorrow.
Indicating that Cardiff Bay would be given control over some taxes, Mr Cameron said "good government is when government is responsible for raising some of the money it spends".
Mr Cameron, along with Deputy Prime Minister Nick Clegg, will set out details of the package tomorrow, almost a year after the Silk Commission on devolution recommended giving Wales powers on tax and borrowing.
The Prime Minister indicated that borrowing powers could be used to upgrade the M4 running through South Wales and hinted at the possible devolution of income tax powers - although that would require a new referendum.
He told ITV Wales: "We will be making the announcement tomorrow and I will be making that with the Deputy Prime Minister - this is a coalition Government - but let me be very clear: I believe in devolution. I think that we get better government if we give people in Wales more control over their future, more control over their destiny.
"This is a Government that held the referendum on law-making powers for the Welsh Assembly, and we want to take the next steps to give people in Wales more control and more power.
"I also think government is better if government is responsible for raising some of the money that is actually spends. I think that makes it more accountable but you will have to wait for the full details tomorrow."
He added: "There are really two issues here: if we want the Welsh Government to be able to borrow money to undertake important infrastructure projects, get more done for the Welsh economy ... like the M4, everyone knows how important that is, then the Welsh Government needs to have some tax revenues.
"The question of income tax, of course as I have said, better if you are responsible for raising some of the money yourself that you spend, but obviously that would involve a referendum."
The cross party Silk Commission published its report on financial powers in November last year, recommending g iving the Welsh Assembly full powers over levies including stamp duty and sharing responsibility for income tax between Cardiff Bay and Westminster.
"I've always believed that the only way to let different parts of the UK make progress in their own way is to truly devolve powers.
"Our economic recovery must be shared and it must have Wales at it's heart. And that means putting the Welsh people firmly in the driving seat."