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Chamber and committees

Official Report: search what was said in Parliament

The Official Report is a written record of public meetings of the Parliament and committees.  

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Dates of parliamentary sessions
  1. Session 1: 12 May 1999 to 31 March 2003
  2. Session 2: 7 May 2003 to 2 April 2007
  3. Session 3: 9 May 2007 to 22 March 2011
  4. Session 4: 11 May 2011 to 23 March 2016
  5. Session 5: 12 May 2016 to 5 May 2021
  6. Current session: 12 May 2021 to 25 April 2025
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Displaying 757 contributions

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Finance and Public Administration Committee

Pre-budget Scrutiny 2022-23: Public Finances and the Impact of Covid-19

Meeting date: 14 September 2021

Daniel Johnson

Do the other witnesses have anything to add?

Finance and Public Administration Committee

Pre-budget Scrutiny 2022-23: Public Finances and the Impact of Covid-19

Meeting date: 14 September 2021

Daniel Johnson

I would like to follow up the discussion on the operation of the fiscal framework. The 2019-20 budget contained tax proposals that should have raised an additional £500 million, but, because of the block grant adjustment and the fiscal framework, only £148 million of additional funding came to the Scottish Government. My understanding of that is that we did not do such a good job of growing the number of taxpayers in Scotland or their ability to pay tax—in other words, how much money they were earning. Is that correct? If so, what does that tell us about the policies that are being pursued in Scotland to grow the tax base and earnings? Does it tell us something about the Scottish Government’s ability to use the big fiscal lever that it has, or does it, in fact, show that that lever is not really effective? I am trying to remember what I learned in economics in my first year at university on elasticity of demand and the tax rate. Does it tell us that people switch behaviour when we alter tax rates in Scotland?

I ask David Eiser to respond first, but I am interested in hearing from the other witnesses.

Finance and Public Administration Committee

Pre-budget Scrutiny 2022-23: Public Finances and the Impact of Covid-19

Meeting date: 14 September 2021

Daniel Johnson

Do Susan and David agree that we need to both prioritise enterprise support and increase its focus? Would you support that proposition?

Finance and Public Administration Committee

Pre-budget Scrutiny 2022-23: Public Finances and the Impact of Covid-19

Meeting date: 14 September 2021

Daniel Johnson

Please do.

Finance and Public Administration Committee

Pre-budget Scrutiny 2022-23: Public Finances and the Impact of Covid-19

Meeting date: 14 September 2021

Daniel Johnson

I take your point about the public sector, but a significant number of people—if not most people—who have been on furlough are employed by the private sector. What policy interventions would you like to see? Would they involve skills and retraining or perhaps job guarantee schemes? What interventions would the STUC like to take place to preserve private sector employment?

Finance and Public Administration Committee

Pre-budget Scrutiny 2022-23: Public Finances and the Impact of Covid-19

Meeting date: 14 September 2021

Daniel Johnson

I wonder whether you can identify any particular consequences. Are there areas of provision that you think are particularly exposed or that have suffered because of the funding shortfall?

Finance and Public Administration Committee

Pre-budget Scrutiny 2022-23: Public Finances and the Impact of Covid-19

Meeting date: 7 September 2021

Daniel Johnson

Surely not.

Finance and Public Administration Committee

Pre-budget Scrutiny 2022-23: Public Finances and the Impact of Covid-19

Meeting date: 7 September 2021

Daniel Johnson

Kevin Robertson alluded to the need to examine the non-domestic rates situation. I completely agree with that view. Do you agree with the assessment that the fundamental problem is that non-domestic rates do not reflect the balance of trade—specifically retail trade—in the economy, and that non-store retailers are simply paying rates for having a warehouse rather than rates that reflect the fact that they are selling directly to consumers? Further, fundamentally, those rates are only notionally connected to rent—essentially, the assessors come up with a rateable value, but there is no direct correlation to what people are paying in rent. That means that we have a system that is broken and is a potential impediment to recovery in the sector. Do you think that I am overegging the situation, or do you agree with that position?

Finance and Public Administration Committee

Pre-budget Scrutiny 2022-23: Public Finances and the Impact of Covid-19

Meeting date: 7 September 2021

Daniel Johnson

We agree that there needs to be an alternative. We need to think about what that looks like in the longer term, but are there also steps that should be taken in the shorter term? In the longer term, what should we be using as the basis for taxation? Should there be some sort of generalised sales tax? Should rent be taxed directly? Should it be landlords who are taxed rather than tenants? I know that your response to that question will be no, but I thought that I would put it out there nonetheless.

Finally, is there something that we can do in the short term to address the issues around online retailers? For instance, could we create a new category of retail or warehouse premises that would enable us to use the existing, albeit imperfect, regime to tax the massive increase in sales that the non-store retailers have experienced over the past 18 months?

Finance and Public Administration Committee

Pre-budget Scrutiny 2022-23: Public Finances and the Impact of Covid-19

Meeting date: 7 September 2021

Daniel Johnson

I will resist the temptation to have a rant about the revaluation process—I will leave that for another day.

Finally, I ask Joanne Walker whether she has any thoughts or observations on the need for reform of non-domestic rates or any views about what should replace them.