Chamber and committees

That touches on the question that Daniel Johnson or the convener asked earlier about what takes the place of oil and gas once it is no longer there, because that is where we have a concentration of higher earners. I go back to the point, which I made previously, that it ultimately comes down to the opportunities that are presented through the transition to net zero. We have to ensure that the transition is just, but that is where the opportunities will arise. We know that there are particular strengths in the Scottish economy in an array of areas such as food and drink, tourism, life sciences and higher education, but, when it comes to the jobs that are displaced by the transition to net zero, the opportunities will come through jobs that are involved in the delivery of net zero.

The ask is to draw a more explicit link between tax policy and economic policy. We are almost considering this in isolation as a tax framework. I take that on board.

The key point that I want to bear in mind is that our income tax revenues are growing—

Can you pick that up please, Alex?

I take your point. There is a combination of commitments, including the manifesto commitments on which the Government was elected and the commitments that are the product of the joint agreement with the Scottish Green Party. Fundamentally, it will take time to implement what the citizens assembly produces. Depending on how significant and profound the changes that the assembly advocates are, it could take some time to implement them, given the legislative process and potentially a period of implementation beyond that.

Our commitment to maintain the small business bonus and ensure that at least 100,000 businesses benefit from it, on which we were elected, is for the lifetime of this Parliament. We will deliver in the lifetime of this Parliament our commitment to extend council tax exemption to under-22s. That provides certainty that we will implement that change.

With the citizens assembly, there is an element of the unknown, in the sense that I cannot predict what the outcome will be. It is for the assembly to engage in deliberations and make proposals. I do not want to say anything that could be seen to pre-empt that process.

We all recognise that there have been long-standing discussions and debates on local taxation. All parties have engaged in pieces of work, either independently or on a cross-party basis, to explore potential amendments to or replacements for council tax. I think that we are all keen to see what the assembly comes up with and to give the proposals that emerge from that process the due consideration that they deserve.

I am not in a position at this point to outline what specifically will be in the remit. There is a commitment to a delivery process and engagement with the Convention of Scottish Local Authorities, and I do not want to pre-empt that. However, I assure you that the Parliament will be kept fully abreast of all proposals as they are developed ahead of the citizens assembly’s work commencing.

I am not precluding issues or saying what the citizens assembly may or may not choose to deliberate on. As I said, you can look at the exact wording in the framework for tax on the programme of work that we are undertaking. It is incumbent on me to ensure that the remit of the citizens assembly reflects the shared policy commitment that was agreed with the Scottish Green Party, and it will.

May I ask you to clarify that? The big focus here is income tax revenues, and in that context what the SFC and the block grant adjustment say is what we must operate with. We can come up with a separate set of forecasts, using a different model and methodology, but that is an academic point; we have to work with what the SFC gives us. I am keen to get a sense of what additional forecasting the committee is asking the Government to explore.

Okay. Let me break it down.

On the broader issue of productivity, we have just published a national strategy for economic transformation, which sets out a range of measures and has productivity and skills at its heart. We recognise the issues with growing the working-age population, but we have to operate within the constraints of the Scotland Act 1998. As a result, we have no control over the levers of migration, which is a huge issue that has been compounded by Brexit—

That is too far down the road. Obviously, the important thing with national insurance contributions is the interaction with the benefit system, which has to be borne in mind. A significant majority of social security is still reserved and controlled at Westminster. The framework provides the means of considering and scrutinising any proposals for new taxes to be devolved and how they should be implemented and delivered.

A practical piece of work that could be done immediately and achieved relatively quickly were national insurance contributions to be devolved would be to address the marginal rate—the gap between the Scottish higher rate and the UK upper earnings limit. The fundamental consideration of the role of the tax and how it interacts with income tax more broadly would be a complex matter, but the methodology that is outlined in the framework would provide a way to consider any changes and to scrutinise and test proposals.

Again, we are open to proposals. I think that the mechanism to which you refer is in section 80B of the Scotland Act 1998, but that is not without its significant challenges—a proposal would require the agreement of the UK Parliament and would have to be run through a set of tests. It could be quite a challenging process. As an example, we have made some basic requests of the UK Government in respect of the aforementioned national insurance marginal rate and around VAT and refurbishing properties. We have not been able to make progress on those simple areas, which does not bode well for dialogue on the potential devolution of new national taxes. Of course, we keep those matters under review, and the framework sets out a process for how such issues can be considered.

Alex Doig might want to add something on the process for devolution of new national taxes via section 80B.