The Official Report is a written record of public meetings of the Parliament and committees.
All Official Reports of meetings in the Debating Chamber of the Scottish Parliament.
All Official Reports of public meetings of committees.
Displaying 4778 contributions
Finance and Public Administration Committee [Draft]
Meeting date: 9 December 2025
Kenneth Gibson
The reason I ask is that the Scottish tax system is bolted on to the UK system. Some of our previous witnesses over the years—Professor Heald is an obvious example—have talked about the fact that the UK system is not progressive. We have seen graphs that show that, for example, when your income reaches a certain level, you lose the child benefit. That applies to one person and not another—blah, blah, blah. How can the Scottish system be made more progressive if it has to interact with a system that is not progressive? Do you get what I am saying? I may not have put it very clearly. With a progressive tax system, everybody thinks that, as earnings go up, their share of tax goes up, but that does not happen. It goes up, it stays level and then it goes down—and we see the same picture in Scotland.
From an audit perspective, how can the system be made more progressive in the Scottish context, given the backdrop that we have to work with?
09:45Finance and Public Administration Committee [Draft]
Meeting date: 9 December 2025
Kenneth Gibson
I will move on to that in a wee second. The reason I am trying to get your view on this is that in paragraph 24 of your report, you talk about the higher rate of tax in Scotland, which begins at £43,663, compared to £50,271 in the rest of the UK. What about the impact of national insurance and tax combined? If you think about it, people earning between those two figures in Scotland will pay 8 per cent national insurance, plus the higher rate of tax at 42 per cent—effectively, a marginal rate of half. However, when their income goes over £50,000, their tax drops, and so the system becomes less progressive. People who earn £51,000 will pay a lower marginal rate of tax than people who earn £44,000. Is that not right?
Finance and Public Administration Committee [Draft]
Meeting date: 9 December 2025
Kenneth Gibson
I know that you are trying not to get too deep into policy matters.
Finance and Public Administration Committee [Draft]
Meeting date: 9 December 2025
Kenneth Gibson
The Scottish Government has no power over the levy.
Finance and Public Administration Committee [Draft]
Meeting date: 9 December 2025
Kenneth Gibson
The Laffer curve is not as simple as people think.
Finance and Public Administration Committee [Draft]
Meeting date: 9 December 2025
Kenneth Gibson
I asked three questions at the start, one of which was about LBTT behavioural change. Why do you not look at that? Clearly, one would anticipate behavioural change there. The £137 million of the tax performance gap that was due to other factors is quite a high proportion of the £617 million—it is more than 20 per cent; in fact, it is 22 per cent. What are those other factors? It is a bit opaque.
Finance and Public Administration Committee [Draft]
Meeting date: 9 December 2025
Kenneth Gibson
I mean changes that have already been signalled. If people are to get higher benefits, that reduces the likelihood that they will join the labour market. What impact will that have on fiscal sustainability and taxes?
Finance and Public Administration Committee [Draft]
Meeting date: 9 December 2025
Kenneth Gibson
I ask because a lot of your report is about behavioural change, but behavioural change does not happen only at the top end; it happens across the pay scale. Your report seems to make no reference to that.
11:15Finance and Public Administration Committee [Draft]
Meeting date: 9 December 2025
Kenneth Gibson
In exhibit 8, you discuss some of the pressures on the Scottish Government. I will not go through them all. While you say that the whole of the UK is impacted by inflation and demand-led spending, in relation to Scotland you mention a real-terms cut in the Scottish Government’s capital block grant over the next five years and a
“slow real-terms growth rate in resource funding through the block grant, at 1 per cent per annum”
over the same period. In previous questions, we have touched on your emphasis on the point that you make in paragraph 54—namely, that
“in the short to medium term, public spending will be the main lever by which it can improve fiscal sustainability.”
What milestones do you expect the Scottish Government to provide? In paragraph 55, you say that the Scottish Government needs to include
“timescales and milestones against which progress will be measured.”
What timescales do you have in mind? Craig Hoy rightly mentioned the £2.6 billion gap in resource funding and the £2.1 billion gap in capital funding that will exist by 2029-30. What kind of milestones are you looking for against which you can measure the Government’s success?
Finance and Public Administration Committee [Draft]
Meeting date: 9 December 2025
Kenneth Gibson
I am sorry to interrupt, but I think that the point about understanding is really important. The thinking used to be that it was about people fleeing the country, whereas you make it clear in the wee window on page 26 that
“Behavioural responses to tax policy changes ... can include choices such as whether to work more hours, to divert income into pension contributions, take income as dividends instead of salary, or whether to seek employment elsewhere”.