Official Report 225KB pdf
The next item of business is a debate on motion S7M-00249, in the name of Jenny Gilruth, on wealth taxation for public services. I invite members who wish to speak in the debate to press their request-to-speak buttons.
14:40
I am conscious that the Minister for Public Finance, Hannah Mary Goodlad, will give her first speech in closing the debate. Hannah Mary’s victory in Shetland was one of the biggest highlights in the Scottish National Party’s recent election victory. Colleagues will have observed, as I did, her energetic approach to winning round the folk of Shetland. Ms Goodlad has secured her seat at the table. I know that I speak on behalf of the whole SNP group when I say how delighted we all are to have her with us.
At the heart of the motion is a simple but important principle: taxation plays a vital role in funding our public services. The Scottish Government believes strongly that the way in which we use our tax powers must be fair, progressive and sustainable. Put simply, the cut that the Government takes from every pound that our citizens earn should be about making our society better for everyone.
Context matters, of course. The Scottish Government’s finances do not exist in a silo, insulated from events elsewhere. Whether it be Brexit, the illegal war in Ukraine, inflationary shocks, Westminster austerity or the recent conflict in the middle east, we operate against a backdrop of prolonged economic turmoil. All those factors have placed enormous pressures on public and household finances in recent years. However, despite the financial challenges, the Scottish Government has been able to deliver for our people, as the election results in May confirmed.
A key theme in the election campaign, which cut across most parties manifestos, was how we all proposed to alleviate the cost of living crisis. Across Scotland, the people we all represent are finding it really tough. The food shop is up, gas and electricity bills are up and rent or mortgage payments are up again as inflation remains too high. Regardless of party, our collective priority as a Parliament should be about making a difference to improve the lives of the people we all represent. We are not much divided in this Parliament on that aspiration.
The Scottish Government believes that the people who earn the most have the broadest shoulders and should be expected to make a fair contribution to support the running of public services. That means that we have been able to raise an extra £1.8 billion to support our public services.
I welcome the minister to her new role. How does she explain Scotland’s economic performance gap?
As Mr McKee is whispering in my ear, the economy is growing faster in Scotland than in other parts of the United Kingdom. In part, that is a result of our approach to a progressive taxation system, which I will go on to talk about, because it benefits our society. I know that Mr Hoy is really engaged in that, because we need to work together on how we can help to support our constituents, regardless of party.
We have also been able to fund new policies, such as the Scottish child payment, which is helping to keep the level of child poverty in Scotland lower than it is in the rest of the United Kingdom. Indeed, University of Oxford professor Danny Dorling has described the Scottish child payment policy as a major contributor to the largest reduction in child poverty anywhere in Europe since the fall of the Berlin wall.
I reflect, and I am sure that we will hear, that there is a general feeling among some of the Opposition that our approach to social security is out of kilter. Some parties would rather take from the vulnerable by making cuts to social security benefits to fund lower taxes for those with more, but the financial challenges that this country faces were not created by the poor.
The SNP Scottish Government will never target those with least to give. Since the Social Security (Scotland) Act 2018 was passed, we have established a radically different social security system that is built on dignity, fairness and respect. Our investment in social security supports our national mission to end child poverty. It helps to support poorer families. It helps to support unpaid carers. It helps to support old folk to heat their homes. Social security allows disabled people to live independent lives.
Rather than taking from those who are already struggling, we believe that the wealthier should pay a little more. I refer to people who are on higher than average salaries, like you, Presiding Officer, me and MSPs across the parties. I doubt that we would hear critique about that from the public.
One of the minister’s predecessors was famously completely unaware of the principles of the Laffer curve. What is her view on that theory and whether it impacts on what she says?
Mr Flynn has provided me with an analogy with the Laffer curve: it went up and then it fell back down. I am not sure whether Mr Kerr would agree with that analogy. I am more than happy to have a discussion with him and, of course, with Mr McKee, the Cabinet Secretary for Public Service Reform, on the Laffer curve. I know that Mr Kerr takes the matter very seriously, as he has spoken about the Laffer curve on many occasions in Parliament.
It is the case that taxation helps us to improve people’s lives. However, for taxation to be truly effective, it must do more than raise revenue; it must also create the right incentives to work, to invest and to grow the economy. On that point, I hope that there is greater opportunity for political consensus.
Fair and progressive taxation is not a barrier to growth. In fact, it is the foundation of a productive economy—funding the infrastructure, supporting the workforce and providing the stability that businesses depend on. That is why—
Will the Deputy First Minister take an intervention?
I will take Mr Marra, but I am conscious of the time.
I appreciate that the Deputy First Minister has given way. In these matters, she and her predecessors have taken advice from a tax advisory group. Can she update us on the status of that group? Will it be maintained, and when will it next meet?
I think that Mr Marra is referring to the Scottish Fiscal Commission.
No, the tax advisory group.
Okay. I would like to come back to Mr Marra in greater detail on that. I met the Scottish Fiscal Commission earlier today and we will continue that engagement. However, we are looking at a range of ways in which we can better engage with businesses. Mr Marra might be aware of some of the First Minister’s comments about our engagement, particularly with business, in recent weeks; I will come on to that. To give Mr Marra some comfort now, I will say that the Government will be voting with the Labour Party on its amendment to the motion today.
More broadly, following the election, we need to look at engagement in the round and consider whether that is the best context. Without making a decision on my feet today, I give Mr Marra an undertaking that I will write to him. I was in a discussion with the First Minister earlier today on those matters, and I do not want to prejudge the outcome of that.
We have to grow the economy—we all understand that—but the Government is not focused on tackling child poverty to the detriment of economic growth. Rather, that economic growth creates the necessary conditions whereby child poverty can be eradicated. It is not growth for its own sake, but growth to help support our people. We are rightly focused as a Government on creating the conditions for that growth, by supporting good jobs, attracting investment and maintaining high-quality public services. That is exactly why, as I said to Mr Marra, the Government will support the Labour Party’s amendment.
Ultimately, economic growth underpins all that we do in relation to fiscal sustainability. By boosting employment and investment, we expand our tax base, which in turn helps to fund the public services that our people rely on.
We know that, alongside growing the economy, reform is essential. That is exactly why the First Minister has appointed Ivan McKee to lead this work at Cabinet level. Yesterday, the First Minister and I met all senior civil servants in the Scottish Government to talk more to that mission. Next week, alongside Mr McKee, we will meet the leaders of our public bodies on exactly the same subject matter.
The public finances are challenging, and I do not shy away from that reality. However, there are opportunities here for more efficient ways of working. There is cross-party support to reduce the number of public bodies in Scotland, and I am sure that colleagues will engage with Mr McKee directly on that.
Colleagues who served in the previous session of Parliament will recall that we reinforced our commitment to ensuring that the public finances are on a sustainable footing through the medium-term financial strategy, which was published last June. Thanks to the decisions that were taken by the Government, more than half of Scottish taxpayers—as we heard during First Minister’s questions—are now expected to pay less income tax in 2026-27 than they would if they lived in England. We will keep it that way over the course of this session of Parliament. Unlike in other parts of the UK, our people will continue to benefit from free tuition, free prescriptions and no peak rail fares. Having applied that progressive approach to residential land and buildings transaction rates also ensures that those who buy the most expensive properties pay proportionately more tax.
On council tax, we are continuing to work with local government to build cross-party agreement on the future of council tax in Scotland. This Government exists in a Parliament of minorities, so I recognise that we need cross-party support to allow reform to be delivered on council tax, but I also recognise that council tax is a regressive form of taxation. We will, therefore, publish analysis later this year that will help to form an evidence base to inform any wider reforms, subject to Parliament’s support.
We have also given councils much greater flexibility to increase the charges for second and long-term empty homes, ensuring that, where housing is owned as a form of wealth rather than a lived-in home, more can be charged for it. On non-domestic rates, the basic property rate is the lowest it has been since 2018-19, and the small business bonus scheme remains the most generous of its kind in the United Kingdom.
However, we are now reaching the limit of what we can do with our devolved taxation levers. The UK Government has the powers to tax wealth far differently than it has done, but it has chosen instead to take short-sighted decisions, such as the decision to increase employer national insurance contributions, which has damaged the economy and created additional pressures on public services. If the UK Government is not willing to instil fair and progressive change in that area, it should give the Scottish Government the powers to do more. In the meantime, we are determined to do all that we can with the limited powers that we have. That includes aiming for a better balance between taxation of labour, income and wealth.
Scottish income tax provides about 80 per cent of devolved tax revenues, and our policy choices since devolution have resulted in the most progressive income tax system in the UK. However, we want a tax system that is even more resilient and gives us a broader set of tools to respond to economic shocks and future fiscal challenges. We are already taking action where we can. We are delivering on our commitment to introduce air departure tax in April 2027 and, through this framework, we will introduce a private jet tax from April 2028. We know that private jets produce significantly more—
Will the cabinet secretary give way?
I am happy to do so for Mr Rennie.
I have been listening carefully to the cabinet secretary’s contribution. She has, in passing, referenced the challenging fiscal set-up, but most of what she says sounds as though she will increase taxes to close the gap. Is that what she is implying?
I regret that, like his colleague Mr Cole-Hamilton, Mr Rennie has perhaps not been listening to what I have said. To clarify on the record, I note that those are not the comments that I have made today.
We need to look at other, broader opportunities to raise revenue in Scotland. There is a significant fiscal challenge ahead of the Government; the Opposition is well aware of that. I have seen Mr Rennie’s amendment to the motion, which is very critical of where we are currently. However, we exist in a Parliament of minorities, so we have to work together to address the budget gap. That is why Mr McKee’s role is so pivotal in terms of the efficiencies and reform that he will have to drive.
More broadly, the Government believes that those who enjoy the privilege of travelling on private jets should make a fairer contribution to the public finances, but we want to go further, which is why we are seeking the devolution of further powers to address the issue of private jet ghost flights. When a private jet completes a one-way trip, it often flies on to its next location with no passengers. Air departure tax is a tax on the carriage of passengers, so such flights would be exempt from it. However, those flights still produce emissions and support the activity of the super-wealthy. With estimates suggesting that up to 41 per cent of private jet flights take off without passengers, it is only right that we explore every possible opportunity to bring that activity into the scope of our progressive taxation system, and we call on the UK Government to devolve the powers to allow us to do so.
We are improving fairness at the top end of the council tax system, which is allowing us to raise additional funding to support our public services. Currently, some high-value properties face council tax bills that are not materially different from those for far more modest homes. From April 2028, we will introduce new council tax bands for properties that are worth more than £1 million.
In our tax strategy, we have committed to exploring the reforms that are needed to continue to deliver more sustainable and growing tax revenues in the future. That includes considering the balance of taxes across labour, income and wealth that I alluded to previously.
To shape those next steps, we are opening up a broad, evidence-based conversation on how Scotland can tax wealth more effectively, bringing together experts and stakeholders from across the country. That work will look at new approaches to wealth taxation and at the opportunities and challenges for a fairer and more sustainable tax system. I extend an invitation to the Opposition to work with the Government on that and to be part of the broader discussion, so that we can find consensus as a Parliament on those matters.
We know that meaningful reform of wealth taxation in Scotland would need significant co-operation from the UK Government and a fundamental change in relation to where the powers sit. Indeed, as the Scottish Green Party acknowledged in its manifesto, the prospect of a Scottish wealth tax would be feasible only with independence—or at least with the agreement of the UK Government to further devolve those powers. Of course, the Scottish Government would far rather that those tax powers were devolved back to Scotland, because an independent Scotland would give us the power to redesign—with the people and businesses of Scotland—our wealth taxation and other far-outdated taxes to work more effectively.
The pressures on our public finances are real, and the constraints on what we can currently achieve are significant. I ask parties to engage constructively and openly with the Government about what further steps we can take to consider the right balance of taxation for Scotland. The Government is committed to ambitious reform to reduce costs while increasing the effectiveness of our public services and achieving better outcomes for our citizens.
What I am asking the Parliament to do today is to empower us to continue to implement a progressive taxation system—a system that asks the wealthiest to pay their fair share while helping the poorest to make ends meet, which supports our businesses to drive the economic growth that is needed and which allows us to deliver better public services for our people while supporting those who are most in need.
I move,
That the Parliament believes in fair, progressive and sustainable taxation to support the delivery of public services; welcomes the progress made towards the creation of a private jet tax and a mansion tax; supports actions to go further and seek the powers necessary to take action on so-called ghost flights of private planes; recognises that Scotland’s current powers limit the scope for additional wealth taxation, and endorses the Scottish Government’s plans to explore what further steps could be taken either within the current system or with full fiscal powers.
I remind colleagues that there should be no interventions or interruptions during a first speech. I call Kim Schmulian to speak to and move amendment S7M-00249.2 in her first speech.
14:54
Thank you, Deputy Presiding Officer. I join other members in welcoming you and your colleagues to your new roles.
I congratulate those members who have been re-elected and those, like me, who are joining the chamber for the first time. I extend particular good wishes to my fellow Glasgow MSPs. Despite our obvious differences, I am sure that we can all work together when required, and I look forward to that happening. I thank the many thousands of people across Glasgow who voted Reform, searching for something that other parties were not providing—a new way for a new time.
I also extend my thanks to the cabinet secretary for her speech. However, she will not be surprised to know that I do not agree with most of it.
As this is my first address to the chamber, I would like to share a little of my background. A small glimpse into a person’s soul, I find, gives a sense of perspective on their approach to life and to politics. I grew up in a council flat in Haddington, East Lothian, the youngest of four daughters. My father was a labourer and my mother was a secretary. Times were often tough. I remember my father’s face when work was scarce and he had to sign on at the buroo, as we called it then. I understood then, and I believe now, that a person’s dignity is bound up in their ability to bring home a wage. When my father could not do that, it was written all over him. That stayed with me and it shapes everything that I believe about taxation, work, education and the role of Government.
I know what it means to work hard, to build something and to understand what ordinary families are really facing. That background is not incidental to why I am here; it is the reason why I am here. Those views mirror what I heard from Reform voters on the doorstep—they said it, and I certainly got it.
So, to the business of the chamber. The most obvious task that I have is to play a part in holding the Government to account. That begins today. In the weeks since I entered the Parliament, I have watched the long arm of the state extend further still. The SNP Government has set about its manifesto commitments with enthusiasm, and that arm has been lengthening since its first majority Government, with no sign yet of restraint.
My first impression has been clear: “profit” is a dirty word here, and the answer to everything is to tax the rich, even when there is no evidence that that has ever worked. I do not believe that “profit” is a dirty word. It is what drives us forward. It becomes a problem only when Governments fail to use the powers that are already at their disposal—competition law and regulation—to prevent abuse and excess. The answer is not to punish success; the answer is to govern well.
This week, the Institute of Chartered Accountants of Scotland confirmed what Reform has argued throughout: Scotland’s six income tax bands act as a disincentive to work. As a small country with a small population, we have constructed one of the most complex devolved taxation systems anywhere. Reform believes in a simpler structure: lower taxes, a freer marketplace with less regulation, and our economic growth driven by the spirit and enterprise of our people. That is how we fund public services sustainably and without punishing aspiration. We do not believe that the answer is always to spend more money, particularly when there is no hard evidence that it is making anything better.
There is a reality that the Parliament must face honestly: Scotland has a structural deficit. Everyone here knows it. The public deserves honesty about the need to bring spending under control—not more commitments that we cannot afford and not more taxation that drives away the very people and businesses that we desperately need here.
That brings me to today’s motion—yet more tax that Scotland does not need. Let us be clear about the constitutional reality: the Scottish Government’s powers on taxation are limited, and those powers have already been pushed to their limits. At almost every earnings level, Scots already pay significantly more income tax than those south of the border. Higher council tax bands for properties worth more than £1 million are in the pipeline. The devolved tax levers have all been pulled and still it seems that it is not enough.
Wealth taxes do not work. The evidence across every jurisdiction that has tried them is consistent. They distort behaviour, reduce investment and raise considerably less than projected. Why is that? It is because capital is mobile. People with the means make choices. They move, they restructure and they invest elsewhere. A thriving economy is not built by making the country the most expensive place to succeed.
I want to go further than the economic, because there is something deeply personal at stake here. We are talking about the homes for which families across Scotland have worked and saved for decades—the nest eggs set aside for children so that they might not have to struggle as hard as their parents did; the asset that might one day help to meet the cost of care in retirement, which is already a source of enormous anxiety for so many families.
In England, where a similar property threshold was set at £2 million by another well-intentioned left-wing Administration, we can see that the policy is backfiring. The housing market is feeling the effects, and the cruellest consequence will come when elderly people are forced to release equity from their homes not only to fund help with care but to meet that unfair and poorly designed tax. People who did everything right—people who worked hard, saved hard and planned for the future—are being let down at the last hurdle. The Government’s proposed tax is not a progressive tax; it is a betrayal.
The Government’s motion is well intentioned but mistaken. Scotland does not need more taxation; it needs growth, enterprise, honesty about our finances and the courage to make different choices. I am proud to oppose the motion.
I move amendment S7M-00249.2, to leave out from “believes” to end and insert:
“notes the data published by HMRC and research by the Institute for Fiscal Studies, which show that each 1% increase in income tax results in a 0.77% reduction in tax revenue; believes that this acts as a disincentive to growth and contributes to economic stagnation and loss of opportunities for everyone; further believes that increasing taxation for some people has a wider impact on everyone; considers that evidence suggesting that, in retrospect, increases in wealth taxes can lead to a significant flight of tax revenues, contradicts previous assessments by the Scottish Fiscal Commission (SFC) that increasing taxation would result in only a minimal flight of tax revenue, and calls on the SFC to review its approach to modelling of using contradictory real data against its hypothetical forecasts.”
15:01
Labour welcomes the early opportunity to debate the scale of the fiscal challenge that the SNP has created for Scotland. The £4.7 billion gap between the spending trajectory that has been set by the Government and the income that the Scottish Fiscal Commission has projected will be generated is vast. How that gap is tackled will be the defining issue of this session of the Parliament, and it will affect everything else that we do.
We might all wish that that process will involve arresting the decline in standards when it comes to the ability of our schools to best equip our nation’s children for their futures. Perhaps we could start by understanding why pupils in Scotland are a year behind those in England in mathematics. Such outcomes have long-term economic consequences.
Will the member take an intervention?
No, thank you. I am just getting started.
We might all wish that the process would involve addressing the drug deaths crisis, which is the worst in the developed world and is more than three times worse than it is in other parts of the UK, where the same drug laws apply. We might wish to deal with social care, national health service reform, online crime and much more. Those are the many issues that hang off the back of the fiscal choices that we make as a Parliament.
Instead, we must deal with the overarching fiscal malaise that was forewarned, in response to which the Government has yet to present a coherent answer. The assessment that the Institute for Fiscal Studies provided of the SNP’s spending plans during the election was absolutely brutal. The £1.4 billion increase in spending commitments, for which no credible funding has been identified, could increase the fiscal gap to some £6.1 billion.
Unfortunately, the big answers will not be found in the scope of the measures that the Government has identified in its motion. It has failed to quantify how much those measures would raise. By my calculations, the proposed mansion and jet taxes would account for up to about 0.33 per cent of the gap. I have rounded that figure up and, frankly, I have been rather generous in my assessment. I do not believe that the Government believes that those measures are commensurate with the scale of the challenge.
Mr Marra said that the fiscal gap is a consequence of the Government’s spending plans and that we have no plan for addressing it. I think that he is wrong on both counts. The fiscal gap is based on projections of past increases continuing into the future, and that is not necessarily Government policy. The Fraser of Allander Institute was clear in saying that the spending review that was published earlier this year laid out how the Government intends to close the fiscal gap over the five-year period.
I would certainly have to differ with Mr McKee on some of the analysis. The demand on our public services is recognised. It is clear from many reports by the Scottish Fiscal Commission that demand on public services and the requirements on them in meeting, for example, the cost of climate change will continue to rise, not just over the course of the current parliamentary session but in the future. Given that we have an ageing population, we know that health spending is projected to continue to grow. The issue is a result partly of the demand that exists, as well as of the policy choices that Mr McKee and his Government colleagues have taken.
The Government needs to adopt a far more serious approach. If appointing the axe-master general to the Cabinet is how the Government intends to address the remaining 99.7 per cent of the gap, that will be ruinous for our public services. Mr Rennie identified the need to set out the balance in relation to spending, taxation and, crucially, growth when it comes to tackling the key issues.
Had Scottish Labour prevailed in the election, we would have undertaken an urgent process to set all of that right. Instead, the SNP won a handsome victory in May, but it is incumbent on it to honestly appraise the budget in a manner that it has failed to do for years. In three years out of the past four, we have had an emergency budget. We cannot find ourselves in that situation again.
I welcome the cabinet secretary’s commitment to report back on the status of the tax advisory group that was advising her predecessor in the Government. We must get the right balance between the taxing of income and the taxing of wealth, because there is a trade-off and tax cannot always be viewed as additional, despite the broad challenges that we face. What consideration will the Scottish Government give to the behavioural effects of the taxation policies that we are talking about today? It is crucial that the Government and the Parliament get the right advice on that.
In the spirit of collective endeavour, because we all have to put our shoulders to the wheel and get on with it, the Labour amendment asks the Government to be true to its word today. I believe that it will do so, which is welcome. The First Minister has committed to looking at business rates and addressing what business leaders know to be a broken system. He met Sir Tom Hunter on 14 May and personally promised him reform. This week, the First Minister further pledged to act on the fresh start campaign that is being mounted by The Courier, The Press and Journal and The Sunday Post to introduce rates relief from day 1 for those who take over a vacant property. That measure is proposed to discourage properties being left empty and to encourage business growth on high streets in towns and cities, and I think that we all agree that we need action in those areas.
However, Labour believes that that must be seen in the round as part of a comprehensive review of business rates, so that we use them to encourage growth, not as a punitive measure. All of our inboxes are already beginning to groan with messages from people who are suffering as a result of rates revaluation. I sincerely hope that the Parliament as a whole can back Labour’s call to get that under way.
Scottish Labour also wants to see immediate action on council tax reform. If that is ever to be done, it surely has to happen now, at the start of this parliamentary session, given that political constraints always seem to present themselves later. I was elected in 2021 and, in my five years in the Parliament, I have become tired of obfuscation and excuses, of reports being commissioned and then shelved and of the dancing on the heads of pins with the language of consensus when what is required is good leadership and a solid majority in the Parliament. The Government must step up. If it does, we will be partners in trying to find a solution.
The SNP’s 20-year failure to reform council tax is a big part of why our local communities are shadows of their former selves, why our streets are so dirty, why young teachers are flying off to Australia to look for work for want of permanent contracts and why councils are wracked with conflict between workers who are being asked to deliver the impossible and managers who are being asked to pretend that the impossible has been achieved. Let us start this session with an openness to finding a solution.
It is on that basis that we lodged our amendment, and I hope that the whole Parliament will vote for it. I move amendment S7M-00249.4, to insert at end:
“; notes that the Scottish Government’s Medium Term Financial Strategy, published in June 2025, projected a funding gap of over £4.7 billion by 2029-30; considers that developing a sustainable plan to close this gap is essential to Scotland’s public services and that it is incumbent on all parties in the Parliament to work towards this goal; believes that, to this end, the Scottish Government should take a strategic approach across all devolved taxation in Scotland to include an immediate and comprehensive review of business rates, including consideration of measures such as widening the scope of Fresh Start relief to include businesses that occupy an empty unit within six months of the unit becoming vacant, and further believes that the Scottish Government should convene cross-party talks on council tax reform immediately.”
15:07
This is my first opportunity on the record to congratulate the new Deputy First Minister on her appointment. I am pleased that she has chosen to debate this topic so early in the session.
Greens have laid the case for wealth taxes. Both here and at UK level, it is Green voices that are most clearly advocating for change. We do that because we know that the richest 2 per cent have more wealth than half the population combined and because we believe that that is simply indefensible.
It is not only the Greens who believe that. Members will have seen briefings for today’s debate from a range of organisations. The Scottish Trades Union Congress tells us that the
“growth in wealth of Scotland’s ten richest people … has outstripped workers’ wages more than sixfold since”
this Parliament first met in 1999. Tax Justice Scotland, which includes Oxfam Scotland, the Poverty Alliance, the Health and Social Care Alliance Scotland and others, describes wealth taxation as
“one of the most promising opportunities for building a more prosperous and sustainable Scotland.”
We also know that 85 per cent of people in Scotland want taxes on the wealthy to increase. That figure includes a large majority of people who are, themselves, very wealthy, as the organisation Patriotic Millionaires has shown in its briefing.
Would Patrick Harvie concede the point that the very wealthy are also likely to be the most mobile and that they can therefore take their wealth and their assets out of Scotland?
If the member reads the briefing that I have just mentioned, he will see that the vast majority of millionaires who were canvassed by that organisation are more worried about doctors leaving the country than they are about millionaires leaving the country.
We need to face up to the fact that what poses as trickle-down economics is, in reality, hoover-up economics. It always was, and it has led to the hoarding of wealth by those who are least in need. If the SNP now agrees and accepts the case for a bigger role for wealth taxation, that is great, but we will need to hear some specifics—more than we see in the motion—and if cross-party talks are being offered, they will need to come with real political will to act.
To be clear, I note that I really welcome the progress that has been made—and I should, as a lot of it has been the result of pressure from the Greens. The private jet tax and the mansion tax are both positive steps that show that tax can be successfully targeted at those with the most and those who consume more than their share. I am also pleased that support is growing for the so-called Amazon tax: a tax that is targeted at some of the biggest and wealthiest companies doing business—the online retailers. The Greens support that, the SNP supports it and I understand that Labour supports it, too. Today’s Green amendment gives Parliament the chance to endorse it.
However, let us be clear that, welcome as those steps are, they have, on their own, been modest measures in both the scale of the revenues that they generate and their power to address the current maldistribution of wealth. Is there more that we could do if we had greater fiscal power? Of course there is, and Greens support that call. I am particularly pleased that Labour has lodged a positive and constructive amendment that does not seek to remove that possibility from the Government’s motion.
It is equally critical that we do not use that possibility of new powers as cover—as an excuse to delay action that we can take within existing powers. The single most significant element of wealth tax in Scotland is a broken system, and it is the single biggest example of failure in the history of devolution. This Parliament has achieved a lot and, as its authority has grown as the seat of Scotland’s self-government, its confidence as an institution has grown. However, the most glaring omission—and the challenge that has been ducked time and time again—is reform of the council tax.
The council tax was unfair even when it was introduced, but it has grown ever more regressive as property values have spiralled, and it is inadequate to meet local government’s needs. It now represents a small fraction of the revenue that our councils need, and it locks them into growing dependency on the national Government. Given that it is still based on 1991 valuations, it will be an astonishing 40 years out of date by the end of the current session of Parliament if we, collectively, do not act. That must not be allowed to happen.
A modern, progressive property tax would help cut inequality, let our councils invest in their services and help prevent even worse inflation in the cost of housing. I know that it is a political challenge—let us be in no doubt about that—but if the Scottish Government is remotely serious about the need for further steps on wealth taxation, it simply cannot continue to ignore the most important element of wealth tax that is within its control, which is the broken, inefficient and unfair council tax.
That is why I move amendment S7M-00249.1, to insert at end:
“; recognises that significant scope exists for further action within devolved powers, such as surcharges within the non-domestic rates system; further recognises that political support has grown for a so-called Amazon tax, as proposed in both the 2026 Scottish Green Party and Scottish National Party manifestos, and believes that progressive reform of property tax could play a powerful role in wealth taxation, and that the Scottish Government must not allow council tax valuations to reach the milestone of being 40 years out of date by the end of the current parliamentary session.”
15:13
I think that we all know why this debate is taking place: the SNP Government and John Swinney are in hock to the Scottish Green Party. A party that does not even believe in economic growth has influence, albeit now from outwith the Government, over the SNP Administration’s tax policy. However, the fact that the Greens are no longer in government does not mean that they cannot do real and lasting damage to the Scottish economy, Scottish workers and Scottish businesses, just as they did when they were in government.
Let me start with a few home truths—the basics that may be lost on some of the more wackadoodle MSPs elected to this Parliament in May. First, there is no such thing as exclusively public money. There is only taxpayers’ money, and the Government has a duty to spend it wisely. Secondly, the Government should have a very good reason to tax people’s income and wealth; it has no moral case and no justification to do so otherwise. Thirdly, taxing anything beyond a certain point can, and does, generate less. This Government saw that clearly in the previous session of Parliament.
I am grateful to the member for taking my intervention. Does he agree in principle that abolishing poverty is a legitimate reason to impose taxation on those who have more than their share?
Growing the economy is the legitimate way of eradicating poverty. If we grew the economy, we would not need the burgeoning benefits bill that the SNP has presided over for the past 14 years.
Mr Harvie might disagree, but I believe that there is a moral and social case for cutting tax. The Government does not see that and the Parliament has never tried it. I remind ministers of one simple fact: the Parliament has not just tax-raising but tax-varying powers. That is why the Scottish Conservatives proposed a fully costed set of tax cuts in the previous session of Parliament, and that is why we will continue to argue during this session of Parliament—as our amendment does—for a reduction in income tax to stimulate the much-needed growth that we all want to see, to fund Scotland’s public services.
The inescapable fact is that people in Scotland now pay over £1.8 billion more a year in tax than they would if they lived in the rest of the UK. Many believe that there is nothing credible to show for it. Those struggling to access healthcare, having to raid their own savings or their pension to pay for a new knee or a hip, or those who are damaging their cars by driving on roads that are riddled with potholes are, quite rightly, questioning what it is that they are receiving.
In an election during the cost of living crisis, we committed to cutting the biggest—
Will the member take an intervention?
I do not have time, I am afraid—or I will take it, if I can get the time back.
I agree on the need for fiscal competence, but all that we are hearing from those on that side of the chamber is about cuts. The member mentioned potholes. Does he recognise that some public expenditure—on transport infrastructure, for example—is vital for economic growth? Does he not recognise the need for fiscal responsibility and public expenditure to deliver growth in that sense?
Absolutely, but the best way to generate tax receipts is to keep people in employment. The member’s party fatally underestimated that when it increased the national insurance tax attached to jobs, which forced people who were contributing to the economy out of work and out of the labour market. Those people are now in receipt of benefits. What I am suggesting will unlock the money to improve roads in constituencies such as Dumfriesshire, as we all want to do.
To those who say that cutting tax is inherently bad, I say: let us think about that for a moment. There is no contradiction between being fiscally conservative and pro-business, and wanting better public services and being modern and compassionate.
I now want to address head-on the size of the deficit that the Government faces and to address its causes. Ministers face a £5 billion deficit by the end of the decade, but let us be clear: that is down to overspending, not a lack of tax receipts. I welcome ministers’ desire to cut the size of the state, but I question their ability to do that and their commitment to achieving it.
Notwithstanding the SNP’s pledge to deliver free school bags for all primary children and a culture payment for all 18-year-olds, the Deputy First Minister has her head in the sand when it comes to the biggest problem of all—cutting the SNP’s benefits bill. By the end of this decade, that bill will reach £10 billion, and I have heard nothing from the SNP, the Greens, Labour or Reform that signals a commitment to reducing it. We, on the other hand, have been crystal clear: we would reintroduce the two-child benefit cap, apply it to the Scottish child payment and significantly overhaul the adult disability payment to ensure that it fairly promotes work.
I will also address the issue of wealth taxes.
Will the member take an intervention?
I do not have time, I am afraid—I have taken two already.
You do have time, actually.
I will take the intervention if I get the time back, Deputy Presiding Officer.
Does the member recognise that the adult disability payment has to do with the additional costs of having a disability or a long-term condition? It does not have anything to do with whether or not someone is in work. Indeed, decreasing the payment takes away support that encourages people into work.
I fully understand that that was the central policy proposition when the benefit was introduced, but there has been significant growth in the number of young people with mental health conditions, so can the cabinet secretary explain what additional costs are being experienced, particularly with regard to those who are not working? The Government has conceded the point that it needs to review the way in which the benefit is operating—it has to, because it is totally unaffordable. That is why we have argued very strongly for that to happen.
To go back to the wealth tax, I have to ask this question: is the SNP, under the influence of the Greens, now so infected with the politics of envy that it effectively wants to shut down wealth? Talk of a private jet tax—
Will the member give way?
I will not. I think that I have been quite indulgent.
I ask members who are trying to make an intervention to press their request-to-speak buttons. A number of members have not been doing that. If they do so, it helps with the broadcast.
I do not believe that I have time to take an intervention.
As the Presiding Officer has made clear, we will add on time when a member takes an intervention.
If I have unlimited time, I say to the member: bring it on.
I ask the member, in all sincerity, what the Conservative position is with regard to wealth, ownership and matters of equality and distribution. There is a tradition within the Conservative Party, going back to Noel Skelton and Harold Macmillan, of thinking about these things deeply and seriously. Does the member recognise that profound wealth inequality in society creates not only social ills but profound economic ills?
Members can go back beyond Macmillan, to Disraeli and others, to find the principle of one-nation conservatism alive and well. The issue is how proportionately and effectively we tax the wealthy. I believe that, if we simply send a message out to globally wealthy individuals that Scotland is a hostile environment, fewer of them will come and more of them will leave. That is the fundamental reality that is lost on Patrick Harvie. We must guard against that.
The point that I made to Mr Harvie earlier is that some of the wealthiest Scots are also the most socially mobile. Take Alan Cumming, who lives in his $5 million Manhattan townhouse, or Brian Cox, who divides his time between the UK and the United States. When Brian Cox comes to Britain, he chooses Primrose Hill in London, where he avoids the Scottish National Party’s high taxes. Although Mr Cox is happy to fly north to Scotland—I am not sure whether he does so on a private jet, Mr Harvie—he does not want to live here. He has explained:
“I find Dundee difficult … the poverty is very hard to take. To see the heroin addiction, to see where it’s got to”.
It is strange that that did not make it into an SNP party election broadcast.
I want to turn now to the motion and amendments before us. On the Labour amendment, I agree on the need to examine business rates, but I remind members that, during the previous session of Parliament, budgets that the Labour Party did not oppose repeatedly short-changed Scottish businesses on rates relief.
As for Reform’s amendment, I note the reference to the Institute for Fiscal Studies, and I must commend Reform for SNP levels of selective quotation. Was it not the IFS that described Reform’s self-funding tax cuts as “a mirage” and “not credible”?
The Greens’ amendment sums up, perhaps, the timbre of the debate. To it, I pose one question: when there is little or no wealth left in Scotland to tax, and when the wealthy have gone and the tax base shrinks, how on earth will we fund the public services that our country needs and deserves?
That is why the Conservatives will vote against the motion, and it is why we will steadfastly oppose any further tax increases or any attempt to further devolve tax powers to this Parliament. Fair tax, low tax and a growing tax base should be the watchwords of this Parliament in this session.
I move amendment S7M-00249.3, to leave out from “, progressive” to end and insert:
“and low taxation, which incentivises work and investment; rejects the left-wing ‘Holyrood’ consensus, which believes that Scotland can tax its way to economic growth; calls on the Scottish Government to use its existing devolved taxation powers to reduce income tax to stimulate growth, and rules out any further devolution of fiscal powers, which have already created a damaging tax differential, which undermines Scotland's ability to retain and attract high earners and wealth creators.”
15:23
When I intervened on the cabinet secretary to ask her about the balance of her speech, the next sentence from her was about another tax. She may say that I should take the whole speech in its context—she did talk about other things—but the message that was clearly sent out was about a traditional tax-and-spend approach and policy. The trouble with that is that we need to have trust in taxation.
We saw what happened when Humza Yousaf was First Minister. He lost control of the narrative and the rhetoric, and it sounded as though he was going to increase taxes for ever. He got very excited about the prospect of which taxes he could increase. Pretty immediately after that, there were severe attempts by the Government to bring the budgets back into control in year. For two years in a row, in fact, emergency cuts had to be introduced to the Scottish Government’s spending proposals.
I say all of that because it knocked public confidence, and, when we lose confidence and trust in taxation and the Government, we get behavioural change. Sometimes it is not the policy at the time that causes that change but the prospect of what the policy might be in two or three years’ time. When people who are mobile make decisions about where they are going to take a job, they do so with a view to the future and where they think the Government is going. We are not talking about millionaires here; Patrick Harvie talked about doctors and consultants, and we have a significant problem in Scotland with the recruitment of consultants.
I am enjoying Mr Rennie’s analysis of where we are. He raises the issue of the looming £5 billion black hole. The Deputy First Minister seemed to suggest that taxes were not going to rise to fill that. Mr McKee is on record as saying that public sector reform does not mean reducing overall public spending. Is Mr Rennie any clearer than I am as to how that £5 million black hole is therefore to be filled?
I am a generous man and I have full confidence in the front bench to sort out that puzzle and conundrum. It will require resolution, because it is looming fast. The £5 billion—the Deputy First Minister could not quite bring herself to say that—is a huge amount and the issue will require resolution quickly, because such savings take a long time to implement. We cannot just pull a lever and have things happen—things take a long time to happen.
I am confident that Jenny Gilruth and Ivan McKee will introduce the changes that are required, and I think that the First Minister has set them that task, but I am not sure that I have heard that today.
I wonder whether I could bring Mr Rennie back to the argument that he was making about trust in the tax system. He seems to place most of the problem around devolved approaches to progressive tax. Is it not at least as plausible that the reason why people lack trust in the tax system is the tax dodging and tax avoidance by the super-rich and by big business? Is that where we should start taking action to restore trust and revenue?
I believe that that is part of the problem, and we should not kid ourselves that it is all just one equation. I accept that and I encourage firmer and faster measures, but we are in this Parliament, where we need to make decisions about our finances. We need to be focused rather than deflecting on to other Parliaments and other issues.
Public service reform will require to be substantial, and we will need to engage in new methods of reform. I will work in partnership with Ivan McKee and Jenny Gilruth to make that happen and reach agreement, if we possibly can, because I accept that change is hard. Today, I met an organisation that promotes social impact bonds. I know that that area was in the Scottish National Party’s manifesto—it was in ours, too—to incentivise investment from private sources in order to secure a return for substantial change. We know that, when a fire is going on in public services, it is difficult to implement change at the same time, because of the people and money that are available, so I am in favour of such measures.
I am in favour of tax reform and, on the face of it, I agree with everything that is in the Green amendment. Council tax reform is long overdue. I would favour moving from taxation of physical assets through business rates to online taxes for Amazon and other such companies. My problem with that is the rhetoric, which sounds too enthusiastic about increasing taxation.
We should have reform, and we should work on the basis that it is revenue neutral as a starting point, before we even consider whether it should result in increased revenue in the future. It sounds as if I am being boring, but a bit of boringness in politics does no harm, because it brings predictability and confidence. The Government and parties sometimes reach for easy solutions, but sometimes the easier and more glitzy something sounds, the more unbelievable it is.
Let us focus on actually making the change. Let us build confidence among taxpayers. Let us grow the economy. Let us make sure that we have more participation in society and the economy, so that more people contribute to taxation—that way, I will get excited. That is the change that we need, and I urge members to vote for our amendment.
I move, as an amendment to motion S7M-00249, to leave out from “welcomes” to end and insert:
“notes that fair taxation must recognise the current cost of living crisis and the impact that any tax increases can have on individuals and businesses; believes that the Scottish Government must prioritise getting Scotland’s finances in order, in light of warnings by the Institute of Fiscal Studies that it faces a ‘fiscal reckoning’; considers that taxpayers in Scotland deserve value for money as well as confidence that their taxes are being spent wisely, and believes that the trust that taxpayers should have in a government to spend wisely has been lost over the last 19 years of an SNP administration.”
We move to the open debate. I remind members that there should be no interruptions during a first speech.
I call Katie Hagmann to make a first speech.
15:29
I am thrilled, humbled and, if I am honest, mildly terrified to be giving my first speech in our Scottish Parliament. First, I congratulate the Deputy Presiding Officer on her new role, as well as Jenny Gilruth on her role as Cabinet Secretary for Finance and Local Government and Deputy First Minister. I thank the people of Carrick, Cumnock and Doon Valley for placing their trust in me.
What an enormous privilege it is to be trusted to serve. The First Minister has spoken of the responsibility of public service, and that responsibility requires vision, bravery, compassion and integrity. That deep sense of duty sits with me each and every day. It is what drives me and it is what I will put into practice as the MSP for the constituency. What a constituency it is: from Culzean castle on the Ayrshire coast, gazing out to the iconic silhouette of Ailsa Craig and across to Turnberry, which is the birthplace of Robert the Bruce to, in the north, Mauchline and Scotland’s national monument to Robert Burns, before moving through the proud industrial heritage of Cumnock and to the stunning beauty of Loch Doon in the heart of the Galloway forest park. I am continually inspired by the history, culture, natural beauty and, above all, the people and the communities that define Carrick, Cumnock and the Doon Valley.
I am stepping into the role and picking up the baton from two incredible women in Scottish politics. My predecessor, Elena Whitham, devoted herself to public service, having worked in Scottish Women’s Aid, across local government and as an MSP and minister. Elena led with tenacity, intellect, kindness and compassion. I send her my best wishes for the next chapter in her life and thank her for her service.
Carrick, Cumnock and Doon Valley was also the constituency of the formidable late Jeane Freeman. Jeane led on the creation of Social Security Scotland, enshrining her own values of dignity, fairness and respect in Scotland’s legislation. As Cabinet Secretary for Health and Sport, Jeane steered us through the worst of the Covid pandemic with those values. She co-founded Women for Independence, ensuring that women’s voices were brought into the independence debate. She was a giant of a woman, and I will forever be guided and inspired by her lifelong commitment to public service, social justice and fairness.
That sense of fairness is, I believe, central to the debate. Nestled in the heart of my constituency lies the small village of Dailly, which is the birthplace of the Rev John Thomson, the 19th century minister whose name has forever been associated with the well-known Scottish phrase “We’re aw Jock Tamson’s bairns”. That phrase speaks to something fundamental about Scotland and the progressive values that we hold dear. No matter our background or where we come from, we are all equal in worth and we are all deserving of dignity. Governments must match progressive values by making progressive choices. Wealth taxation for public services is one of those choices.
I come to the debate in a unique position. For the past nine years, I have served as a councillor in local government, including time as the Convention of Scottish Local Authorities resources spokesperson. I fought for front-line services and worked cross-party. I gave evidence to committees in the Parliament, and I often shared the stark financial reality that some local authorities are facing.
When I gave evidence to MSPs, one question that I was often asked was, “Where is the extra money to come from?” It was a fair and necessary question. I welcome the record-high funding for local government. However, after years of Westminster austerity, and due to the constraints of devolution, the Scottish Government and local government face immensely challenging fiscal realities. It is imperative that we are bold and brave and explore progressive wealth taxation. By asking those with the broadest shoulders to pay a little bit more, we can deliver stronger services and help the less well-off to not only survive but thrive.
For the first time in my life, I am in the higher tax bracket, and I am quite comfortable about that. My son benefits from free university tuition. Almost a year to the date, I was sitting with my terrified mum in surgery school, preparing for her life-saving cancer treatment in our incredible NHS. Thanks to the cancer treatment pathways that are available, she is able to watch me online giving this speech today.
I passionately believe in fair, progressive and sustainable taxation to support the delivery of our public services. I welcome the progress that has been made towards a private jet tax and a mansion tax, particularly given that the mansion tax funds will go directly towards local areas. However, as is set out in the Scottish Government’s motion, we must recognise that Scotland’s current powers are limited. I welcome further steps to explore how we can go further, whether in the current devolution settlement or with the full fiscal powers of Scottish independence.
The debate is not ultimately about tax; it is about dignity, fairness, respect and the country that we know that Scotland can become. If we truly believe that we are all Jock Tamson’s bairns, we must also believe that prosperity should be shared, that opportunity should be available to all and that those who have benefited from our society should contribute fairly to sustaining it for us all.
The rest of this Official Report will be published progressively as soon as the text is available.
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