Taxation
The next item of business is a statement by John Swinney on the Scottish Government’s approach to taxation. The cabinet secretary will take questions at the end of his statement. There should therefore be no interventions or interruptions. I call John Swinney. Cabinet secretary, you have up to 15 minutes.
14:55
I wish to update Parliament on the Government’s proposals for the future of taxation in Scotland in the context of our economic and constitutional aspirations.
The passing of the Scotland Act 2012 means that from April 2015 this Parliament will be empowered to introduce and manage taxes on the purchase or leasing of land and buildings, and on the disposal of waste to landfill. From April 2016, under current constitutional arrangements, this Parliament will set a partial rate of income tax to be administered and collected by Her Majesty’s Revenue and Customs.
Prior to both those events, we will ask the people of Scotland to support this Government’s belief that decisions about Scotland should be made by those who care most about Scotland—the people of Scotland—and that, as a result, this Parliament should hold responsibility for the full range of taxes that are needed to generate sustainable economic growth and to support our public services.
The transfer of powers in the Scotland Act 2012 falls significantly short of our ambition for full fiscal autonomy. It does not even match the ambition of the Calman commission, as it fails to deliver on its proposals that air passenger duty and aggregates levy also be devolved.
After the measures are in place, 85 per cent of tax that is paid in Scotland will remain reserved. This Parliament will exercise responsibility for only 15 per cent of taxes that are paid in Scotland and for only 58 per cent of the revenue that is spent in Scotland. Our aspiration for full fiscal responsibility would allow Parliament to design and set all taxes in the interests of stimulating economic growth, supporting the public services of Scotland and building social cohesion and wellbeing.
Since 2007 we have demonstrated an approach to taxation that is equitable and that promotes economic growth. We have put an end to unfair council tax rises that punished some of the poorest people in our society. In business, we have used our responsibility for non-domestic rates to develop the most competitive environment for business in the United Kingdom.
The Scottish Government intends to introduce two new taxes to replace the UK taxes that will cease in Scotland from April 2015—a tax on land and building transactions and a tax on disposal of waste to landfill. Today, I launch the consultation on the land and buildings transaction tax. We will consult on a landfill tax in the autumn and we will follow that with a consultation on tax management provisions later in the year.
As with the entire approach the Government takes and intends to take on taxation, those proposals are firmly founded on principles—Scottish principles—that have stood the test of time. In 1776 Adam Smith set out four maxims with regard to taxes in his “An Inquiry into the Nature and Causes of the Wealth of Nations”—the burden should be proportionate to the ability to pay and there should be certainty, convenience and efficiency of collection. Smith’s maxims allow us to build a system that will meet the needs of a modern, 21st century Scotland that is grounded on solid foundations. To those four principles, this Government will add our core purpose of delivering sustainable economic growth for Scotland and meeting the distinctive needs of Scotland.
This Government has sought to use what responsibility it has on taxation to ensure that no one is asked to pay more than they can legitimately afford. In today’s consultation on the proposed land and building transaction tax, we continue that approach. Our consultation signals our preference for a move from the UK’s slab-tax approach to a progressive system of taxation in which the amount that is paid is more closely related to the value of the property and, therefore, to the ability of the individual to pay. At the same time, our consultation also indicates our willingness to adjust the threshold at which taxation is levied in order to support those who are at the lowest end of the market.
We will take the views of the public and tax professionals through our consultation. However, to demonstrate the difference that taking a progressive approach can bring for people who are purchasing property in Scotland, the consultation paper illustrates two revenue-neutral scenarios. One scenario would remove the tax charge from all house purchases below £180,000, which would significantly benefit first-time buyers. The other scenario would ensure that all those who purchase properties that cost under £325,000 would see the tax that they pay decrease, which would bring benefits to about 95 per cent of the property market. Those who would purchase property at higher values would, of course, pay more.
We are also consulting on reliefs and exemptions, with proposals for simplifying the present arrangements for stamp duty land tax, and for tailoring exemptions to Scottish needs and policy interests. We are proposing anti-avoidance measures and will be interested to hear views on those. We are also giving thought to the merits of a general anti-avoidance measure and are seeking views throughout our consultation processes on what form that might take.
We have another nearly three years before the devolved taxes come into force. It would not make sense, nor would it be the practice of any Government, to consult now on tax rates that will apply so far in the future. The examples in the consultation document that I am launching today are therefore illustrative. However, I expect to propose rates for parliamentary approval through the annual budget process nearer the time.
We believe that it is important to create certainty around the amount of tax that individuals have to pay. To do this, we need to consult effectively on our proposals and to implement them with care. That is the process that we commence today and which will take a final form in the proposals that we will enact.
The UK Government’s recent mismanagement of the North Sea fiscal regime has illustrated the damage that can be caused by a lack of engagement with taxpayers. The Chancellor of the Exchequer’s decision to increase the tax rate on all North Sea oil fields last year, irrespective of their profitability and without consultation, seriously damaged investor confidence. Providing certainty about when and how much tax is due is therefore an important guiding principle for our new system.
We will engage with taxpayers to provide certainty and ensure that tax changes have been properly thought through and communicated before being introduced. As is the case for any Government, we may at times need to move swiftly in order to tackle threats of tax evasion and avoidance, or to limit or reduce distortive behaviours. However, wherever possible, we will seek to provide information and clarity about our intentions.
One of the opportunities that are before us is to create a simple and administratively efficient tax collection system. Improving ease of payment will contribute to our agenda for economic growth. Businesses that are operating in Scotland tell us that our doing that would significantly reduce the tax burden and increase the attractiveness of doing business here.
We will ensure that it is easy to fulfil the obligations of a citizen in Scotland to pay taxes. We envisage a system that is simple to operate and is what we call digital first. Although we are basing our system on the principles of Adam Smith, no one should feel that they have to journey back to Smith’s time to pay their taxes. We will develop appropriate information technology systems to ensure that information about Scottish taxes and ways to pay them is easily accessible to all, in line with our broader objectives.
Our consultation also proposes a link between payment of tax on property purchases and the provision of land registration documentation in order to simplify processing and reduce late payment.
It is essential that our tax system be efficient. It is received wisdom that taxes that are paid must be devoted to running the country and not consumed in administration of the system. That is a lesson that we will take on board. Scotland will benchmark itself against international standards to ensure that as little as possible of the revenue that is raised is spent on administration of the system. Our approach to collection will be not only the right one for Scotland, but the most cost-efficient one.
Having the responsibility in Scotland, for Scotland, for the design of the new system, as well as for rates and the approach to tax itself, can bring clear benefits. Scottish taxes will fit our distinctive social context and be expressed in Scots law. I have given careful thought to the appropriate arrangements for administration of those taxes, by weighing up the considerations of flexibility, cost and risk. In taking forward our proposals for taxation, I am determined to ensure that we have a system that is fit for purpose—now and in the future.
I have considered carefully the option of paying Her Majesty’s Revenue and Customs to collect taxes on behalf of this Parliament. In evidence to the Scottish Parliament’s Finance Committee, a representative of HMRC said of the role that it would play:
“If the Scottish Government … wants something that has a different framework or different rates, we would have to look at the details of what it wanted to do and decide whether it made sense for us to try to adapt our systems to operate that or whether we would need to say that it was so different that there would be no point in our trying to operate it.”
Pressed on what would happen if a future Scottish Government sought to amend the tax, the representative of HMRC said:
“In the end, however, it will be up to HMRC management to decide whether … to operate the taxes.”—[Official Report, Finance Committee, 30 May 2012; c 1291-92.]
It is clear to me that, if we ask HMRC to operate land and buildings transaction tax on behalf of this Parliament, the freedom of this Parliament to take forward in full taxation responsibilities could be inhibited. That cannot be right. The very purpose of devolution is to allow the will of the Scottish Parliament to prevail.
We will establish a tax administration function for assessing and collecting both the taxes here in Scotland. The function, which I propose to name revenue Scotland, will be established this year. By 2015, in line with international best practice, it will be operationally independent and its governance enshrined in legislation. That will enable people in Scotland to judge for themselves the benefit of the Scottish Parliament having responsibility for the issues and it will ensure that the will of Parliament is delivered.
Revenue Scotland will offer an innovative approach to collection of taxes. It will work with two firmly established and highly respected organisations: Registers of Scotland, to administer the new land and property tax; and the Scottish Environment Protection Agency, to administer tax on disposals to landfill. Those partnerships will offer further opportunities for us to customise tax collection arrangements that are specific to the Scottish situation, drawing on the relevant knowledge and expertise in Registers of Scotland and SEPA to eradicate duplication and to deliver greater simplicity.
Our costs for revenue Scotland are based on the assumption that we will incorporate the changes to the structure of taxation on land and building transactions that I have already set out. It is a sign of the costliness of HMRC that we will establish revenue Scotland and implement and collect both the replacement taxes for less than HMRC would charge us to deliver what it terms a like-for-like system within the United Kingdom. I estimate that, in the period to 2020, start-up and operational costs in pursuing that approach will be at least 25 per cent lower than they would be had I asked HMRC to deliver the status quo. Through revenue Scotland, we will serve the needs of the people of Scotland at a lower cost than the UK set-up, and we will deliver a better system that is more in line with Scotland’s needs. In due course, revenue Scotland will oversee administration of the full range of taxes that are set by Scottish ministers. It will become the focus of the expertise in tax administration that will grow in Scotland.
In contrast, under the Scotland Act 2012, HMRC will implement the Scottish rate of income tax. Under current constitutional arrangements, that tax will be introduced in 2016 at an estimated cost of £45 million to the Scottish public purse. By establishing revenue Scotland, the Parliament and I can exert our influence to keep costs to a minimum. As yet, the UK Government has not provided a means for me or the Parliament to keep such a check on HMRC’s costs. I will continue to pursue that matter and I hope that I will have Parliament’s full support in that.
Aligned with our broad approach and principles, our tax system will be supported by regular and engaged consultation of taxpayers. In reaching this point, we have already engaged with the Institute of Chartered Accountants of Scotland, the Law Society of Scotland, the Chartered Institute of Taxation, the Scottish Property Federation and the Council of Mortgage Lenders on the issues of tax on land transactions.
To ensure that the views of taxpayers and expert communities remain embedded in the development of our approach to taxation, we will also establish a tax consultation forum to which representative bodies, networks and organisations with an interest in the tax system can contribute. I will chair the forum, which will receive updates on the Government’s emerging taxation proposals and provide an opportunity for us to engage in regular and active listening to the concerns of industry, interest groups and individuals. The first meeting of the forum will take place early in the autumn.
Our work on taxation will also be supported by our recently established fiscal commission, which is a panel of eminent international experts who will oversee our proposals for developing a tax system for an independent Scotland. That is part of our broader programme of work in establishing a macroeconomic framework that promotes fiscal responsibility and market confidence in an independent Scotland.
The views of Parliament are also of primary importance. The ability to scrutinise effectively and to manage properly a taxation system are key responsibilities that come with devolution of taxation. We must work together across party divides to fulfil the function, both in scrutiny of HMRC’s administration of the Scottish rate of income tax, and of the devolved taxes.
The approach that I have outlined represents a strong foundation for the future and creates the basis for this Parliament to acquire the full range of tax powers. With full fiscal responsibilities, we could tailor policies to match the aspirations of the Scottish people and deliver competitive advantages. We could change air passenger duty, harmonise the tax and benefits systems to create a fairer and simpler regime for people, and we could reduce corporate taxation. We could seek opportunities to simplify the tax system and make it more transparent in order to reduce compliance and administration costs, and we could use borrowing powers for capital investment. Those are the opportunities that would be opened up by independence.
This Government is focused on taking forward the powers that we have, implementing the powers that we are scheduled to receive and preparing the foundations for utilising the full range of powers that we require. With that approach, this Government is preparing Scotland effectively for the future.
The cabinet secretary will take questions on the issues raised in his statement. I intend to allow around 30 minutes for questions, after which we will move to the next item of business.
I thank the cabinet secretary for giving the chamber notice of at least some of the Scottish Government’s thinking on taxation. We have heard a great deal this afternoon about why we need to establish a Scottish HMRC, but there has been very little on the question that most people want to know about: whether the new taxes will be higher or lower. The Scottish Government says that it wishes to cut corporation tax, over which it has no control, and yet has said very little about what it plans to do with the taxes for which it has full responsibility, other than to make the rather unconvincing assertion that one option to be consulted on involves a revenue-neutral proposal that will leave 95 per cent of people better off.
Given that, will the cabinet secretary tell us exactly how much it will cost to establish revenue Scotland, what the additional on-going costs to the Registers of Scotland and SEPA will be and whether he has discussed with HMRC the costs of collecting the new tax? Will he also undertake to publish in the Scottish Parliament information centre all his research and costings on these matters?
The cabinet secretary remarked about certainty:
“We believe it is important to create certainty around the amount of tax that individuals have to pay. To do this we need to consult effectively on our proposals”.
Will he apologise for not carrying out a consultation or business impact assessment on the public health levy and undertake to implement just such a consultation on the empty properties levy?
Given that the First Minister has said that he will use the new powers transferred under the Scotland Act 2012 to replace the council tax with a local income tax, will the cabinet secretary tell us exactly when those proposals will be brought forward? Will he assure us that he will not spend any more Government funds or taxpayers’ money on court fees to prevent the Scottish public from seeing the Government’s calculations? Finally, will he confirm that he is still committed to introducing this new income tax?
First, on the question of tax rates, I have in the consultation document set out a couple of proposals on how the land and buildings transaction tax could be designed to fulfil the progressive principle for which the Government has expressed a preference. I note that the Labour Party has expressed no opinion as to whether it believes in the kind of progressive approach that the Government has suggested, but I suppose that that is just another policy vacuum that lies at its heart. It would have been nice to know whether there was any empathy with the progressive principle that the Government is taking forward.
I think that that essentially deals with the question on tax rates, because in the consultation document, which is freely available for people to consider, I illustrate the implications of the move to the progressive approach. The tax rates themselves will be set in the appropriate budget implementing the provisions after the period of consultation on which I am embarking today.
As for the cost of collection, HMRC has indicated to me that, with regard to land and buildings transaction tax and landfill tax, the total cost of delivering and administering the status quo on our behalf until 31 March 2020 would be £22,274,000; the equivalent cost for the proposals that I have set out today is £16,706,000. If Mr Macintosh wishes to see further workings in that regard, I will of course put the details in SPICe.
I have set out the Government’s principles on certainty. As for Mr Macintosh’s point about consultation, the purpose of my being here today is to launch a consultation. Another consultation, on landfill tax, will be held later on in the year. Even when we undertake consultation, Mr Macintosh seems to complain about it.
In relation to the public health levy and empty property relief, I announced the relevant provisions when I announced the draft budget in late September 2011. That is a consultative document, which expresses the Government’s view on its proposed direction. We have heard views from members of the public. Of course opinion is divided on the public health levy. Every week, opinion in the Labour party is divided on the public health levy. I was certainly surprised when, during stage 3 proceedings on the Alcohol (Minimum Pricing) (Scotland) Bill, Dr Richard Simpson gave the public health levy the most emphatic endorsement, despite the fact that, for most of the time for which I stewarded that proposal through the Parliament, I was unaware of the Labour Party’s enthusiastic and definitive support for it.
As for local taxation, the Government fought the election in 2011—in which, I remind Mr Macintosh, we received a pretty sturdy mandate to remain in Government—on the proposition that we would consult on a form of local taxation that was based on the ability to pay during the parliamentary session following the election. That was the Government’s position in 2011, and it remains the Government’s position.
I thank the cabinet secretary for advance sight of his statement and the consultation document.
It is just what we have always wanted—yet another quango. The economy is in a mess, public services are being squeezed and the big wheeze from the Scottish Government is revenue Scotland, a new quango the purpose of which is to collect two taxes during each financial year. [Interruption.] Scottish National Party members are getting very excited. I have no doubt that “Revenue Scotland” lapel badges and wristbands will soon appear.
I have some specific questions for Mr Swinney. He told us that the cost of collection by HMRC would be £22 million. That surprises me, given what HMRC said in evidence to the Finance Committee a mere eight days ago. Mark McDonald—who was bellowing at me across the chamber earlier—asked:
“So you have not provided any cost estimates as part of your discussions with the Government.”
The answer from HMRC was:
“No, because we have not yet been told what kind of tax the Government wants to introduce.”—[Official Report, Finance Committee, 30 May 2012; c 1291.]
Where does the cabinet secretary get the figure of £22 million from? Is it just an estimate that has been plucked out of thin air? Has it magically appeared in the course of the past eight days? How does the background to that estimate compare with the build-up to the £17 million figure that he told us about? Would it not have been wiser to get detailed collection cost estimates from HMRC after it had been given the detail of the taxes and a detailed estimate of the costs of another collection agency, such as the one that Mr Swinney has proposed, and to get the most appropriate and cost-effective agency to do the work on the basis of such real and detailed estimates?
I thought that Mr Brown would welcome the fact that the Government is taking forward an approach that is designed to deliver efficiency and savings to the public purse, and to ensure that we do not spend taxpayers’ money on administration when we could be spending it on other priorities to support the growth of the economy.
Mr Brown asks where I get my numbers from. The figure of £22,274,000 is a detailed estimate from HMRC of what it would cost to deliver the status quo on stamp duty land tax and landfill tax. That is the information that HMRC has given me. I understand the point that Mr Brown makes about what was said in the Official Report of last week’s meeting of the Finance Committee. What HMRC says to the Finance Committee is a matter for HMRC.
If I interpret correctly what HMRC said in response to Mr McDonald, it was speculating about what the cost would be of a varied type of proposal from the Government. However, I asked HMRC to put together a proposal for what the implementation of the status quo would be. I take from what HMRC told the Finance Committee that if we were to do anything different, it would be a lot more expensive. That is the only conclusion that I can deduce from the HMRC material. Clearly, Mr Brown will go off and check all those things, but I have put on the record the information that I have. As I said to Mr Macintosh, I will of course put the information in SPICe.
On the point about the quango, I want to make it absolutely clear to Mr Brown that if he looks in detail at what Registers of Scotland does in relation to property transactions, he will see that it is already very much involved, understandably, in the dealings on property transactions. It therefore makes simple administrative sense for us to get Registers of Scotland more involved in the collection of the land and buildings transaction tax. There are many reasons for doing that, not least of which is the fact that it will be convenient for consumers to pay the bills directly when they are dealing with the Registers of Scotland.
I think that I have described an administratively attractive basis on which the Government can proceed. I have every intention of ensuring that we utilise the existing capability of Registers of Scotland and SEPA to collect the taxes in an administratively efficient fashion. That is why the cost estimates are so superior for the delivery of these provisions within Scotland.
Thank you very much. We have 13 members waiting to ask questions, so to get everyone in from now on, brief questions and answers would be welcome.
It is nice to be foremost in Gavin Brown’s thoughts. Further on in the Official Report of the Finance Committee meeting to which Mr Brown referred, HMRC stated that it could charge Scotland up to an additional £8 million a year depending on what changes were made to its tax system and that it could, indeed, delay the implementation of or even refuse to administer any changes to taxation. It would have been helpful if that part of the Official Report of the Finance Committee meeting had been referred to.
What steps can the cabinet secretary take on the control measures to ensure that revenue Scotland will be more efficient and effective than HMRC and will continue to deliver better value for money for the Scottish public purse?
My final point in response to Mr Brown is the key point in this respect. SEPA and Registers of Scotland are already involved in part of the transactions in question. We have the opportunity to deliver an administratively efficient approach and to build expertise in Scotland on this element of tax collection. That is the principal area in which I will be able to exercise control.
The other aspect is that SEPA and Registers of Scotland operate to the financial standards that the Scottish Government sets, so they must act with administrative efficiency very much at their heart. That is the type of approach that ministers will require of those organisations.
The cabinet secretary has said that he wishes Registers of Scotland to collect the land and buildings transaction tax. He also states that he wants collection to be carried out digitally. Registers of Scotland’s IT system is recognised as not being fit for purpose, so when will the system be replaced and how much will that cost?
Registers of Scotland has some significant IT infrastructure projects that are under way and it has taken forward significant developments in its IT infrastructure, not least of which is some of the online access to undertake individual transactions and registrations. That is part of Registers of Scotland’s on-going work. Our particular approach complements the work that is being taken forward in Registers of Scotland.
Given the gap in our society between the rich and the poor, I welcome the cabinet secretary’s proposal to move to a more progressive tax regime. Does he agree that if we had full powers over taxation the Scottish Parliament could do a lot more to ensure that the heaviest tax burden does not fall on those least able to bear it?
Mr Mason makes an important point about the progressive character of the Government’s proposals. We are obviously interested in the public’s views on that. We think that there is an opportunity to deliver a more progressive system than that which we have. There are illustrations in the consultation document that show how people on lower incomes who are undertaking lower-cost property transactions—principally first-time buyers—would be advantaged by our approach. Clearly, the consultation is an opportunity for members of the public and different organisations to express their views about that and we look forward to hearing those views.
In relation to the wider question about the utilisation of tax systems, in my statement I cited the principles that were set down by Adam Smith in “The Wealth of Nations” in 1776, the first of which is that the tax paid should be proportionate to the ability to pay. That very important principle lies at the heart of the Government’s thinking, although I am not sure what other people in the Parliament think of that particular important principle.
Will the cabinet secretary explain how he squares his Government’s progressive principles with his desire to cut corporation tax and kick-start a race to the bottom?
I believe that cutting corporation tax would assist in creating employment in Scotland and I am utterly focused on creating new jobs and new employment to create opportunities for new livelihoods for individuals. Probably the most significant principle that we can consider is that of getting people into worthwhile, sustainable, remunerative employment. That strikes me as the best way to give people more control over their lives and circumstances, to the improvement of their life chances and those of their families.
I welcome the statement and its progressive nature. I am not surprised that the Conservatives do not welcome it, but I am extremely surprised that the Labour Party does not welcome it either and by its negativity once again.
Organisations, such as the National Association of Estate Agents, have voiced support for a more progressive approach. What effect will the adoption of a progressive approach have on first-time buyers and, more generally, the Scottish housing market?
The first point—this is an important caveat—is that we have yet to come to specific decisions about tax rates and, as I said to Mr Macintosh, they will be set out in the relevant budget statements. The examples that we have provided in the consultation document demonstrate that, if the progressive principle is adopted, there are ways in which the amount of land and buildings transaction tax that would be paid by people who are first-time buyers or who are purchasing lower-cost properties can be significantly reduced, so undoubtedly a benefit would arise for those individuals from changes of that nature. That is clearly an important point that could assist in stimulating the housing market in the medium term.
We will of course be interested in the views and the opinions that are expressed in the consultation and the Government will take due account of those points.
I thank the cabinet secretary for an advance copy of the statement and the consultation document. He talks radically about the powers that he wants, but he is cautious and timid about the powers that he has just received. Instead of a grand new vision on energy efficiency, developing brownfield land, or high street regeneration, what seems to have got Mr Swinney out of his bed this morning was the prospect of setting up a new and additional tax office quango. Of the 35 existing reliefs and exemptions, why is he proposing to make changes to only four of them?
I am bit surprised by Mr Rennie’s comments, because he should know that what gets me out of my bed in the morning is the service of Scotland—or more particularly, at about 5 o’clock this morning, Matthew Swinney. [Laughter.]
I refer Mr Rennie to paragraph 3.12 of the consultation document, where he will see a number of issues raised by the Government on how we can deploy our approach on the land and buildings transaction tax to achieve a number of policy initiatives that are important to Scotland, whether that is about energy efficiency, encouraging business growth or zero carbon homes. The importance that the Government attaches to that is well stated in the consultation document. I thought that Mr Rennie might welcome that type of measure, but we live in hope about his reflections on those points.
I, too, welcome the statement and the progressive nature of the proposals, which many of our colleagues in the trade union movement would support. What discussions does the cabinet secretary plan to have with the Public and Commercial Services Union on the proposals to set up revenue Scotland?
The Government has on-going discussions with our trade unions. I see PCS regularly, and we will talk to it about such points. It is important that we focus on the opportunities to strengthen the partnership working with our trade union colleagues as we take forward an agenda of change in the public sector. I think that our trade union colleagues will welcome the opportunities that we have to build expertise in Scotland on important areas of activity and responsibility.
My colleague Mark Griffin and I could not believe our eyes a moment ago, when we saw that well-known redistributive socialist Mr Ewing, who is sitting to the left of the cabinet secretary, nodding away when the cabinet secretary mentioned progressive taxation. It is a bit far away up here at the back of the chamber, so perhaps our eyes were deceiving us.
Does the cabinet secretary accept that creating tax competition and trickle-down economics is incompatible with the creation of sustainable jobs and quality public services?
I respectfully encourage Mr Findlay to take up the Government’s offer of a free eye test. I did so myself last week, and can confirm that I can see Mr Findlay very clearly. That was £37 from the Government’s perspective. That money is an important contribution to the preventative spend agenda.
My answer to the question is the same as that which I gave to Kezia Dugdale’s question. All our initiatives support the creation of sustainable employment in Scotland. It is about making Scotland a good and effective place in which to do business. Yes, it is about taxation, but it is also about our investment in skills. I regularly encounter companies that tell me how attractive Scotland has been as a place to do business because of the skills output of our colleges and universities. A whole range of other factors will contribute to meeting that economic proposition. Therefore, I encourage Mr Findlay to look slightly more broadly—after the assistance of his free eye test—at the opportunities that are arising to create a competitive economy for Scotland.
I welcome the clarity of, and the proposals in, the statement.
What discussions have taken place or will take place with HMRC and the Office for Budget Responsibility to establish the methodology and processes that will ensure that the transition to changed Scottish tax forecasts will involve a fair initial block grant assessment and adjustment?
Those are essentially discussions to be had between the Scottish Government and the United Kingdom Government through the Joint Exchequer Committee. As Mr Brodie will be aware, in the discussions between ministers to agree a position on the Scotland Bill, there was acceptance of utilising the Holtham commission’s thinking in relation to the block grant adjustment with the Scottish rate of income tax. Those considerations and issues will be fully taken into account when the discussions with the UK Government take place. I confirm that those discussions are on-going.
Many people in my constituency work on one side of the border and live on the other. HMRC will write to people to ask them where they live, but there is no obligation for people to inform it of their residential address. Has the cabinet secretary discussed that with HMRC? Has he considered how the burdens on businesses that employ individuals who live on either side of the border can be minimised?
Those are material issues that relate to the implementation of the Scottish rate of income tax and, if my reading of the Official Report of the Finance Committee meeting is correct, Dr Murray has raised them with HMRC. We are four years away, at least, from the initial assessment of those points. The issues that Dr Murray has raised are material to that discussion and will be discussed fully with the UK Government when we are implementing the Scottish rate of income tax.
The cabinet secretary will be aware that there is a highly skilled workforce in Centre 1 at East Kilbride that will be well up to doing the income tax job that is outlined in the Scotland Act 2012 or, indeed, in an independent Scotland. Does the cabinet secretary agree that, following concerns expressed by HMRC that there is no state of readiness to implement the Scotland Act 2012 proposals on income tax, any necessary planning and training should be implemented without delay to tap into the expertise in East Kilbride and to show respect for the decisions of the Scottish Parliament and of the people of Scotland?
It is important that we utilise the experience that we already have, which is why I took the decision to utilise Registers of Scotland and SEPA, which have significant expertise in the administration of such arrangements. There are some substantial issues about the capability and capacity of HMRC. It comes back to the guarantees that I have received as the minister who will be responsible for the Scottish rate of income tax, although I will not be operationally in control and I will not be able to direct the organisation that is making those preparations. I will, however, be in that position in connection with the landfill tax and the land and buildings transaction tax.
Linda Fabiani has raised some material issues that are not dissimilar to those raised by Dr Murray and which will be the subject of discussion with the UK Government.
It is nice to know that we will not be adding HM to the name of revenue Scotland when it is created.
The creation of the new body offers the chance to create from the start a new culture that is not complicit in facilitating corporate tax avoidance. The addition of a general anti-avoidance role would help to underline that. Will the cabinet secretary invite representatives of the tax justice network to join the new tax forum? The network has done excellent work in this country and around the world to expose tax avoidance and the despicable use of tax havens by those who wish to stash their investments out of reach of the tax system.
That is a helpful point from Mr Harvie and if he wishes to write to me with some further details and suggestions, I will be happy to consider it as part of the consultation exercise. The tax forum is there to ensure that, in a new area of activity, we are able to listen to and absorb the important reflections of a broad range of organisations and individuals, and the organisations that Mr Harvie has mentioned clearly have something substantive to say. I am happy to consider that point.
Thank you. We will have a final question from Margo MacDonald.
Oh, great! [Laughter.] Thank you very much, Presiding Officer.
First, I add my support to what Patrick Harvie said about tax avoidance.
Secondly, I have been looking at the papers and I think that HMRC is not all that keen on the business. It is not exactly touting to do the work, and I wonder why not. I imagine that we would be grown up enough to say that if HMRC could give us a good service, we would take it. However, revenue Scotland is probably the most sensible choice to make just now.
I am, however, worried that all these proposals are subject to the same override clause as is every other decision that the Parliament takes, and that if some of our Labour members’ friends south of the border are ever in government, they might not want to go along with some of the measures. Can we—
I take it that we are coming to a question.
I have asked it. Can we override Westminster?
If we take the absolutist view—and I would never suggest that Margo MacDonald is an absolutist—the current legislative arrangements mean that the Westminster Parliament can legislate for whatever it likes under our current constitutional framework. I suppose that, in theory and in an absolutist context, Margo MacDonald has a fair point.
Where the legislative framework has been put in place as it has, we have the responsibility to implement measures and the Government will do so in the way that I have set out to the Parliament today.