Chamber and committees

I cannot give Ms Baillie a specific date at the current time, as I am awaiting advice on that from my officials, but I am more than happy to correspond with her on the challenge that she has put to me today.

However, I hope that she recognises that significant investment is being put in place to support projects such as the one that she has outlined. I am more than happy to write to her with further detail when I receive it.

On a point of order, Presiding Officer. I could not connect to the app. I would have voted no.

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 am happy to do so for Mr Rennie.

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.

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.

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—

I will take Mr Marra, but I am conscious of the time.

I think that Mr Marra is referring to the Scottish Fiscal Commission.

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—