Chamber and committees

So, there is a cost to acceleration. That is very useful.

As a broader question, how does this work map on to the SFC’s other work? The commission has set out the long-term fiscal scenarios for Scotland, but Professor Roy said that he has learned a lot from this process, too. Can we expect very substantial updates with regard to the longer-term challenges in the next iteration of your 2050 vision?

That takes me on to section 56, in part 2 of the bill, which is on the power to offset credits and debits. We have received some evidence on that section, which we have touched on briefly today.

The Institute of Chartered Accountants of Scotland and the Law Society of Scotland both have concerns about the lack of safeguards for a situation in which there is a dispute between the taxpayer and Revenue Scotland about whether an amount of tax is outstanding. Revenue Scotland has confirmed in writing and in oral evidence that that power would be used only when there is no dispute regarding the amount payable. However, that approach is not explicitly set out in the bill, so there is still concern from those who are charged with operating the system on behalf of clients. Does the Scottish Government intend to amend the bill at stage 2 to make that explicit?

My recollection is that that was recognised in the evidence. I would say that the set-off power was well established and reasonable, given the requirement that there is no dispute, which we have already covered.

Revenue Scotland is an organisation that currently runs two taxes and is about to run a third, if Parliament agrees to that. Is it not disproportionate—at this moment in time, in particular—to bring in a fairly wide-ranging power across those areas, given the caveats that I have talked about? We are putting this power in primary legislation. Is there a good reason for that? Should we not be looking at the matter more in the round, as Liz Smith suggested, in terms of a broader issue around tax?

It just feels a little bit like it is something on a shopping list—it is about wanting parity with HMRC over what is a very limited number of taxes. That does not feel to me to be very sensible.

As part of that, I will come on to section 55, which is about automation. We received concerns from the Chartered Institute of Taxation, which made a specific comparison to the Horizon scandal. Obviously, that attracted the attention of the committee, and rightly so. Does the minister want to make comments on that area?

In earlier answers to the convener, minister, you were keen to draw the distinction between the rate of tax and its administration. One of the bill’s policy intents is to support the Scottish Government’s circular economy objectives, but is it not the case that, in the legislation as set out, the only mechanism for pursuing that is the rate itself?

I do not disagree but my issue on that point is that it is less about the specific operation of the regulation as it applies to different tax rates and more about the fact that we can interrogate this only on the level of principle with regard to how these things might be appropriate, where the human checks and balances are in the systems and what would happen if we did not do that comprehensively. However, I am probably ranging off topic.

The committee has taken a bit of an interest in this area, and we have been addressed by different experts about it. I wonder whether it feels a bit like the piecemeal approach that people are warning against and whether it would be better to have an all-governing AI approach strategy around publication of algorithms, the way in which AI will be applied in different areas and how those things are tested so that the Government takes a more proactive overarching approach, which might be done through legislation, in order to govern the operation of public service in this area.

I suppose that I am just asking for reflections, minister. It is not a criticism necessarily.

The objectives are your own, and they relate to the Scottish Government’s circular economy objectives, which are broad and far reaching. The frustration around the earlier questioning is that, other than the rate, which is not specified in the bill, we cannot really see how they might be achieved. During the development of the bill, did you consider any other mechanisms that might be introduced to help you pursue those objectives?

It would seem that one of the significant limitations on the ability to do more recycling is whether there is enough feedstock, given the amount of demolition that is on-going. There are other limitations concerning capital investment, noting the significant amounts of money that companies must spend to buy or build the machinery that makes the recycling happen. Did you consider any possibility of tax credits in the system to support that kind of capital investment?

It is proposed primary legislation. I take the minister’s point, in that the bill is reasonably constrained by the terms of the Scotland Act 2016. However, a recycling company has to pay the landfill tax at full rate against the last residual waste that comes through the recycling process. Given that it will have highly processed that material and will have done everything that it could to take as much out of it as possible, could a tax credit system not be applied that would allow people to invest in the kind of capital infrastructure that would help them to make the process more efficient and to increase capacity?