Meeting of the Parliament

Meeting date: Wednesday, December 14, 2016

Official Report 893KB pdf

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Taxation

The next item is a debate on motion S5M-03063, in the name of Murdo Fraser, on taxation.

14:40  

Tomorrow, the Cabinet Secretary for Finance and the Constitution will deliver an historic budget. It will be historic not just because it will be the first budget to be delivered by the current finance secretary, but because the Scottish Parliament, for the first time, will use substantial new tax powers. It will be able, as never before, to vary the rates and bands of income tax. That is in addition to control over land and buildings transaction tax, over the aggregates levy and over business rates.

In advance of the budget statement, the Scottish Conservatives have a very clear message: we do not believe that families and businesses in Scotland should be taxed more highly than those elsewhere in the United Kingdom. It is time for the Scottish National Party to take its hands out of the pockets of hard-working Scottish taxpayers and to concentrate instead on measures that will grow the economy and therefore grow the tax base. That is how we will create a more successful and prosperous Scotland, and how we will raise the funds that are necessary for our vital public services—not by hiking taxes and making Scotland uncompetitive.

The backdrop to the debate is Scotland’s economic underperformance. I hardly need remind members about the extent to which the Scottish economy has lagged behind that of the rest of the United Kingdom. Despite there having been a shallower recession in Scotland, its economic recovery has been weaker than the UK’s, and economic growth in real terms has lagged behind that of the UK since the fourth quarter of 2009.

Today’s unemployment statistics tell us that unemployment is higher in Scotland than it is in the rest of the UK, and is rising when it is falling elsewhere. Economic activity is lower, productivity is lower and business confidence is lower—now it is at its lowest point since the 2008 recession. Overall, out of 30 economic indicators, the Scottish economy lags behind that of the UK on 25.

The prospects look little better. Last week, the EY ITEM club published its forecast for Scottish economic growth, which suggests that in the year ahead it will lag substantially behind that of rest of the UK. Only yesterday, we had the latest economic commentary from the widely respected Fraser of Allander institute, which states that Scotland’s recent growth rate has been just one third that of the UK, that growth will remain below trend and that unemployment is likely to rise. That is even before we consider the consequences—positive or negative—of Brexit.

The reason why all this matters in the context of the Scottish Government’s budget tomorrow is stated clearly in yesterday’s Fraser of Allander report. It says:

“With new tax powers coming on-stream in April, it is vital that the gap with the UK is closed.”

That is absolutely right because, from April, the performance of the Scottish economy will determine the overall size of the Scottish Government’s budget.

Murdo Fraser talks about gaps. Does he accept that we are talking about two separate things: the economy and taxation? Is he not concerned about the gap between the very rich—who are not taxed enough—and the very poor?

There is a certain irony in that intervention from John Mason. During the independence referendum, Mr Mason and I did perhaps 30 debates around the country with different groups. In that referendum Mr Mason stood by a white paper that proposed only one change in taxation. It was not a change that would tax the rich more; it was a change that would cut the rate of corporation tax by 3 per cent, to give a tax break to large businesses. He seems to have changed his tune entirely since 2014—like most of his party.

I am grateful to Murdo Fraser for giving way to someone who never endorsed what was in the SNP’s white paper.

The UK Government has just made tax changes to the personal allowance and thresholds that will make every higher-rate taxpayer about £15 a month better off. Does Murdo Fraser really need an extra £15 a month in his pocket when other people are—to quote a phrase—just about managing?

Mr Harvie is being ungenerous. He will know well that the measures that are being taken by the UK Government to more than double the threshold for income tax are lifting millions of families and the lowest-paid people in Britain out of taxation altogether. Our record on that is unsurpassed.

Will Mr Fraser take an intervention?

No. I need to make some progress. I will give way later, if I have time.

Let us look ahead to the Scottish Government’s budget. Roughly half the total funds that are available to the finance secretary will come from taxes that are derived in Scotland: the land and buildings transaction tax, the aggregates levy, income tax, an assignation of partial proceeds from VAT and business rates. If the economy does not grow, the tax revenues do not grow, either.

The remainder of the Scottish Government’s budget—the other 50 per cent—comes in the form of the block grant from Westminster, which is now determined by the fiscal framework that has been negotiated between the UK and Scottish Governments. In that fiscal framework the performance of the Scottish economy relative to that of the UK as a whole is used to calculate the total sum. Therefore, if the Scottish economy continues to underperform against the UK economy, we in Scotland face a double whammy: we will raise less funds in taxes from within Scotland, and the fiscal framework means that the block grant adjustment will reduce the amount of money coming from Westminster. The consequence of economic underperformance is less tax revenue to fund our vital public services.

Will Murdo Fraser take an intervention?

I have not taken an intervention from the Liberal Democrats yet, so I will give way.

Murdo Fraser seems to have ignored the real benefit of boosting skills in Scottish society in order to boost the economy. He seems to think that tax is the only answer for boosting the economy. Does he not recognise the other side of the equation?

I am so disappointed in Willie Rennie’s approach to the debate. I remember those heady days when Tavish Scott led the Liberal Democrats and Mike Rumbles went into the budget negotiation with John Swinney clutching a piece of paper demanding a 2 per cent cut in income tax. What a shame that, under Willie Rennie, the Liberal Democrats have lurched to the left and are now demanding an increase in tax instead of a cut, as Mr Rumbles demanded all those years ago.

The SNP’s plan seems to be to hit Scotland with a £1 billion surcharge on families and businesses, which will make Scotland the highest-taxed part of the United Kingdom over the next four years. Next year alone, the nationalists’ decisions will add an extra £212 million on to the country’s tax burden—a figure that will increase in every year until 2020-21.

As I have said, the UK Government is already on track to double the personal allowance for income tax, which will lift millions out of paying income tax altogether, and help the lowest-paid people. However, the SNP wants to see taxpayers in Scotland being hit with higher charges than exist in the rest of the United Kingdom. Because of the interaction with national insurance, the marginal rate on Scottish workers who earn just above the higher-rate threshold will become 52 per cent of their income, which will create a clear tax differential with the rest of the United Kingdom.

The SNP’s approach might have been understandable if the change in personal taxation were to raise hundreds of millions of pounds. However, in the first year of its operation, the likely maximum sum that will be raised is just £130 million. Is it really worth—for that sum of money—sending out the message that Scotland is an expensive place to live, work and do business in? Is it really worth making Scotland the highest-taxed part of the United Kingdom?

We have heard Scottish businesses’ concern that they will, in order to compensate for the higher tax rates, have to pay a Scottish supplement to attract the best talent. The same must surely apply in our public services. Already, the national health service in Scotland is in competition with the NHS down south for top consultants, and our universities are in competition with universities down south for top academics. What assessment has the Scottish Government made of the additional cost to the public sector from the tax rises? The reality is that they will raise very little money and are likely to do substantial damage to the economy.

It is not just on personal taxation that the SNP has got it wrong. Its doubling of the large business supplement applies to all properties that have a rateable value above £35,000, which means that many relatively modest retail premises will be affected. It is also having an impact on the economy. In September, 13 Scottish business leaders wrote to the finance secretary calling for the Scottish Government to level the playing field with England. It is no wonder that we have seen retail businesses such as McEwens of Perth and McAree Brothers in Stirling closing their doors, with the tax burden being a key factor.

What is so strange about the SNP’s approach to taxation is that it is such a departure from what we have heard from the party in the past. Members who were here in previous sessions will recall the then First Minister, Alex Salmond, lecturing us week after week on the benefits of the Laffer curve and telling us that cutting taxes would lead to higher tax revenues. For more than a decade, the Laffer curve was the central tenet of SNP economic theory, but now the SNP is reduced to the extent that we have a finance secretary who says that he has never even heard of the Laffer curve. Where was Derek Mackay when all the rest of us were sitting here being bored rigid by his former boss? Why was he not paying attention?

For years, the SNP told us that corporation tax should be cut in order to grow the economy and SNP members—including John Mason—stood on manifesto commitments to cut corporation tax. Furthermore, the only substantial tax change that was contained in the 2014 white paper “Scotland’s Future: Your Guide to an Independent Scotland” was a cut to corporation tax. We were told that that was the way to grow the economy and tax revenues. Now, the SNP has done a spectacular U-turn in its approach to taxation.

Bizarrely, the SNP is still committed to a tax cut. It wants to cut air passenger duty—a policy on which we are happy to work with the SNP in order to deliver it. However, the argument for cutting APD—that it will generate economic growth and tax revenues elsewhere in the economy—surely applies to other taxes. Why is the logic of that lost on the finance secretary?

Even the First Minister’s hand-picked chair of the SNP’s new growth commission—our erstwhile colleague in Parliament, Andrew Wilson—gets it. He understands that the way to increase tax revenue is to increase the number of high-earning taxpayers. It was Andrew Wilson who, at the weekend, cited the excellent example of the land and buildings transactions tax. When residential LBTT was introduced, it was supposed to be revenue neutral, but the tax take in the first year was £32 million lower than expected. Why? It was because the then Cabinet Secretary for Finance and Sustainable Growth, John Swinney, was too greedy. He hiked the rates at the upper end too much, which caused a slowdown in the market. As a result, the tax take was less than it should have been. Andrew Wilson, the SNP’s one-time economic spokesman, gets it and Alex Salmond, when he was First Minister, got it. Now, under Nicola Sturgeon, the SNP has lurched to the left and is determined to hike taxes on hard-working Scottish families and businesses. The result will not be higher tax revenues, but an underperforming Scottish economy and a shrinking tax base.

Will Murdo Fraser take an intervention?

I have not taken a Labour intervention, so I happily give way to Mr Findlay.

If Murdo Fraser genuinely believes what he is saying, a way to spread the wealth would be to have more people with high-paid jobs to pay the higher taxes. What does he say to his colleagues who have two of those jobs?

I am so disappointed in Neil Findlay’s intervention. I have been following the debate at Westminster very closely. Even Jeremy Corbyn, and John McDonnell, the shadow chancellor—heroes of Mr Findlay—support the increase in the threshold that has been proposed by the chancellor, Philip Hammond. It seems to be the case that Scottish Labour’s criticism of Jeremy Corbyn is that he is too right wing. If he were more left wing, he would fit better into Mr Findlay’s world.

The finance secretary has 24 hours before he delivers his budget. He has 24 hours to think again. If he wants Scotland to succeed, if he wants our economy to grow and to prosper and if he wants to raise the money that we all want to fund our vital public services, we need a Scotland that is competitive within the United Kingdom and we need to be clear that Scottish families and businesses are not taxed more than they would be in the rest of the United Kingdom. That is the point that is made in our motion, which I have pleasure in moving.

I move,

That the Parliament believes that families and businesses in Scotland should not be taxed more than those elsewhere in the UK.

14:54  

As my colleague the finance secretary has made clear previously in this chamber, the Scottish Government will confirm its tax proposals in its draft budget, which will be published tomorrow.

While not wanting to pre-empt the finance secretary’s draft budget, I welcome this opportunity to discuss the important new tax powers and how they may best be used for the benefit of Scotland’s people and our economy. I will also challenge the premise of the Tories’ simplistic argument and damaging narrative, which harms Scotland’s interests—the Tories are failing to sell the strength of Scotland’s offer for individuals, families and businesses.

The introduction of the new income tax powers will be the most significant act of tax devolution to date, but the Scottish Government approaches those powers from its experience of the successful commencement of land and buildings transaction tax and Scottish landfill tax, its operation of non-domestic rates and its reform of local taxes.

In preparation for the devolution of the fully devolved taxes under the Scotland Act 2012, the then Cabinet Secretary for Finance, Employment and Sustainable Growth, John Swinney, set out to Parliament a Scottish approach to taxation. That approach is founded on the four core Adam Smith principles that taxation should be certain, convenient, efficient and proportionate to the ability to pay. Alongside that, we have a commitment to taking a collaborative approach to tax policy development and a robust approach to tackling tax avoidance, where we have the powers to do so.

Crucially, we have sought to use the new powers on tax to make a difference for Scotland. We pioneered a progressive approach in the UK to the setting of rates and bands for LBTT, whereby the amount that is paid is more closely related to the value of the property or transaction and therefore to the ability of individuals to pay. We have used opportunities to make Scottish landfill tax more effective in tackling the wasteful disposal of resources, thereby supporting our goals for a circular economy.

As set out in the programme for government, we propose to reduce air passenger duty by 50 per cent by the end of the parliamentary session, and to abolish it when the public finances permit, to address a tax that is the most expensive of its kind anywhere in Europe and which continues to act as a barrier to Scotland’s ability to secure new, more efficient direct international services, and to maintain existing ones.

The minister is rightly parading the new powers that are coming to the Scottish Parliament, but why is his Government increasing the unfair council tax that we have had control of since 1999 and not increasing income tax, the powers over which it has just got? What is the point of parading those powers if his Government does not use them?

I will turn to council tax later, and I hope that Willie Rennie will pick up on those points.

Income tax alone will account for the funding of more than a third of the Scottish budget and, as such, those powers must be used responsibly. However, we maintain that using them responsibly might mean being prudent in doing so. I will expand on that.

As we all know, the current fiscal climate is challenging. The UK Government is continuing its counterproductive austerity approach, which is hurting those on low incomes, growing inequality and stifling economic growth, while the European Union referendum result and the subsequent paralysis of a divided UK Government are delivering economic uncertainty and harming the confidence of Scottish and UK businesses.

In the most challenging of times, the Scottish economy has shown resilience. In the first half of 2016, prior to the EU referendum, the Scottish economy continued to grow in the face of on-going external headwinds that were associated with weak global growth and the impacts of lower oil prices on the oil and gas sector and its supply chain. Indeed, in the three months leading up to the EU referendum, Scotland’s economy grew by 0.4 per cent, which was the highest rate of quarterly growth since the start of 2015.

However, we aspire to strengthen Scotland’s economic performance, and we are not complacent about the task that we face. Therefore, we must ensure that we set income tax rates and bands and the wider package of revenues in such a way that they work to the benefit of the people and the economy of Scotland.

In March and in the Scottish election campaign, we set out our intention to protect all low-income taxpayers, and we have proposed to do that by freezing the basic rate of income tax for the duration of the parliamentary session. Equally, we need to ensure that the delivery of key public services is protected and continues to serve the needs of the people of Scotland. I will turn to that later.

Will the minister give way?

I am running short of time, but if the Presiding Officer allows some time for interventions, that will be gratefully received.

I am very grateful to the minister for giving way.

Does the minister agree with the basic proposition that has been set out by the former First Minister, Alex Salmond, and by Andrew Wilson, who chairs the Scottish Government’s growth commission, which is that the tax take can be increased by lowering taxes and stimulating the economy? Does he believe that?

I am trying to set out our understanding of that very point. By using the package of tax and revenues across the Scottish economy, we can have a more competitive economy. I encourage Murdo Fraser to pick up on the points that I am about to make.

Instead of taking Westminster’s path of offering substantial tax cuts for those who least need one, we are proposing to prioritise revenues and the protection of public services.

With regard to our existing powers, we remain committed to competitive business rates. A key part of our package to support enterprise is to give Scotland the most competitive business rates in the UK for our vital small and medium-sized enterprise base. The small business bonus scheme has already saved businesses more than £1 billion cumulatively, and next year it will be expanded to lift 100,000 premises out of business rates altogether. Tomorrow, the cabinet secretary will confirm further proposals for 2017, taking account of the revaluation, while an external review under Ken Barclay is exploring how rates might better reflect economic conditions and support investment and growth. We will respond swiftly when that review reports in the summer.

Our reforms to council tax, which build on the recommendations of the cross-party and cross-government commission on local tax reform, will protect household incomes, make local taxation fairer and ensure that local authorities continue to be properly funded while becoming more accountable.

Will the minister take an intervention?

I am struggling for time now. I ask the member to be brief, please.

I will be very brief. Will the minister reflect on the very first recommendation of the commission that he referred to, which was to abolish the council tax?

Our reforms will protect household incomes, make local taxation fairer and ensure that local authorities continue to be properly funded, as I said. After those reforms, and at the present rates of council tax, charges for all properties will still, on average, remain less than the equivalent charges in England. That, too, contributes to making Scotland an attractive place in which to live.

It remains our view that it was disappointing that, when considering the legislation to reform council tax last month, Parliament failed to support steps to ensure that any future reforms are based on the principle of fair and progressive taxation. The Scottish Government will remain committed to that principle. As both the First Minister and the Cabinet Secretary for Finance and the Constitution have made clear, those reforms are the first steps of a journey of reform. Our direction is clear, and we remain open to engaging with others as we work towards delivering fairer and more progressive local taxation for the longer term.

I challenge the premise of the Tories’ case on two key counts. First, they imply in the framing of their motion that it is a bad thing to vary individual rates or bands in developing a revenue package that is designed to suit Scotland’s needs. Secondly, and crucially, I highlight that, whatever tax rate or revenue stream we refer to—for example council tax or business rates—taxation is, as Willie Rennie pointed out, only one side of the equation.

The Scottish Government delivers and invests in quality public services, including, among other things, free childcare, with our move to deliver 1,140 hours per child; free prescriptions; free undergraduate tuition; and free personal and nursing care for those who need it. We are also investing in the energy efficiency of our housing stock and in our health service, and are maintaining police officer numbers. When all those factors and more are taken into consideration, Scotland remains an extremely attractive and good-value place in which to live and work.

As Patrick Harvie identified, the Tories’ focus on modest differences in the starting point for those paying the upper rate of income tax fails to see the context of a broader contract with families and businesses, where all potentially benefit from the same policies that deliver better services and greater wellbeing for all who live here—for employers, employees, parents, children and, indeed, customers. By delivering on inclusive growth, the evidence tells us that we not only reduce inequality but strengthen the competitiveness of our economy.

Other parties will no doubt take a different view—

Will the minister take an intervention?

I am sorry, but I am in the last moments of my speech.

Other parties will no doubt take a different view on how those tax powers can be used. Although we respect that, they have the luxury of not having to live with the consequences of their actions. They do not have to choose what public services to cut, because they are not proposing to raise tax revenues, and they do not have to live with the long-term consequences of undermining Scotland’s competitiveness as a place in which to live and work.

We believe that we have the balance right, and those policies will be at the heart of the draft budget tomorrow.

I move amendment S5M-03063.3, to leave out from “families” to end and insert:

“the purpose of the devolution of powers over income tax is to allow Scotland to make its own decisions on tax rates; further believes that powers over personal and business taxation should be used in a fair and progressive way that supports a sustainable economy; notes the proposals from all parties on future tax rates, and acknowledges that taxation as a whole must be considered alongside spending plans to be meaningful”.

15:02  

I welcome the opportunity to talk about tax this afternoon. I thank the Tories for bringing the debate to the chamber. I also thank them for the simplicity of their motion, because it gives us a chance to talk about first principles: what motivates us and what our priorities are. Is it not interesting that the Tories always start with the money?

The motion says:

“That the Parliament believes that families and businesses in Scotland should not be taxed more than those elsewhere in the UK.”

Surely they would never dream of lodging a motion that said that the Parliament believes that public services in Scotland should not be any better than those elsewhere in the United Kingdom. That is really the crux of the matter. If we want to protect our valued public services, we have to talk about how we pay for them and who pays for them.

I am a democratic socialist. I believe in the power of Government to transform people’s life chances. I believe that there is nothing inevitable about poverty. I believe that we do not have to accept inequality. My vision for Scotland is one awash with universal high-quality public services that everyone invests in and for which everyone pays their fair share.

I believe in this Parliament. It has been a feature of my whole adult life that came to being in my formative years. I was 15 in 1997, when Labour won the general election; 16 when the referendum that created this place took place; and 17 when the Parliament’s doors opened. I have always believed in this place as a means for Scotland to take its own decisions, in the best interests of the people of Scotland; if we do not accept that, we do not believe in devolution at all.

Austerity is hurting Scotland, and the poorest are hurting the most. I see that across the region that I represent. I have seen a mum working three part-time jobs, two of them on zero-hours contracts, with no security about her finances from one week to the next. Her bus and train fares are going up, but her wages have been frozen. I see the council cuts in her community taking away the breakfast clubs that help her to get to her jobs, and I see cuts to colleges that have taken away from her her chance of getting on in life. I see the cuts taking away the care of the tenement stair and diminishing the quality of her local community. The grass is overgrown, and the sense of pride in the community is deflated. I see her worry about the social care that her mum gets at home, with 15-minute visits. I see her local library being closed and that one place that she could take her kids to for free disappearing altogether.

It does not have to be that way. We can choose to do things differently.

Will the member take an intervention?

If the member does not mind, I will make a bit more progress.

We have substantial tax powers to make choices that are different from those of the Tories. As I said, it does not have to be that way.

I know that we will hear from Derek Mackay tomorrow and that he will tell us that Scotland’s budget is going down. For years, he has been able to blame somebody else somewhere else for the cuts that his Government has had to make, but tomorrow the responsibility for those cuts will be his. Labour has outlined why it does not have to be that way. There do not have to be any further cuts to public services if we are bold enough to use the Parliament’s tax powers.

I want to understand the intention of Labour’s amendment. Kezia Dugdale knows that some of us would like to go further than 50p on the additional or top rate of income tax. Is it her intention to signal a direction of travel or an implacable attachment to that one figure? Does she seek to keep with her those who would like to go further?

It is very much my intention to work with the Greens as closely as we possibly can on progressive taxes. We named 50p in our amendment, as that was the platform that we put to the electorate in May, and the Labour Party intends to stick to that. When we and Patrick Harvie talk about progressive taxes, we talk about asking those with the broadest shoulders to pay more tax and not tinkering around the edges, which the SNP Government has done.

Derek Mackay can choose not to follow our plan, but that is his choice. Every single cut that comes tomorrow and trickles down to towns and communities throughout Scotland will be an SNP cut. That is the responsibility that Derek Mackay bears.

I have listened to what the member has said. How does she square that with the fact that she supported council tax changes that mean that the city that we represent will have over £38 million to help to fund schools that we both want to be refurbished and rebuilt taken away from it by 2021?

If members look at the detail of our local government taxation proposals, they will see that people who live in band A to band D properties will save money because of the platform that we have put forward. We advocate helping those in the poorest communities. The Tories would learn quite substantially from that.

In the two minutes that I have left, I want to make another wider principle point about the Tories’ attitude to taxation. The suggestion that higher taxes are inherently anti-business is in-built to the motion. I refer Murdo Fraser to a tweet that Stephen Boyd has just put out. He has published a table of income tax rates in countries around the world that shows substantially higher income tax rates in countries with economies that are very prosperous and which are booming far more than the Scottish economy, or indeed the UK economy, is. I would take that on board in principle and in practice.

I spend a lot of time travelling the country, talking to businesses and business leaders, and listening to their concerns. It is fair to say that their priority concern is always instability. They worry about Brexit and even more about a second independence referendum, but after we get past those constitutional questions, they tell me that they worry about skills. They want skills and a skilled workforce for the future. The reality is that, in the city of Edinburgh, many jobs that people in poor communities do will go overseas or will be automated. There is no future for Scotland in low-paid and low-skilled work. We have to invest in our people, and the means by which to do that is to invest in education.

Our amendment advocates a 50p top rate of tax. Quite frankly, I do not know where the SNP sits on that. I have heard Nicola Sturgeon say that she supports that in principle and also that, rather than its being radical, it is reckless and that, rather than its being daring, it is daft.

Will the member take an intervention?

Kezia Dugdale has no time to do so.

I have no time left.

Nicola Sturgeon cannot avoid the fact that the Scottish Trades Union Congress remarked on how hugely disappointing it was to see a party that parades as a party of the left abandoning a serious opportunity to advocate progressive taxes that would make a difference.

To conclude with simplicity, this is ultimately about fairness. I pay less as a percentage of my income in tax than I did when the Tories came to power in 2010. I pay less tax now, and I come to the chamber to seek to represent people in the poorest communities who are suffering from the cuts that Murdo Fraser’s Government and party are making. The way to do that is to vote for a 50p top rate of tax.

I move amendment S5M-03063.1, to leave out from “believes” to end and insert:

“agrees that the Scottish Government should set a 50p top rate of tax for those earning over £150,000 a year so that the richest 1% pay their fair share to help stop the cuts and invest in public services.”

I remind people that we are so tight for time that, if anyone goes over time, the amount that they go over will come off the speaking time of other speakers from their party. Time is very tight.

Patrick Harvie, you have no more than 7 minutes to speak to and move amendment S5M-03063.4.

15:10  

Thank you very much, Presiding Officer. I most sincerely welcome this debate and thank the Conservatives for bringing it to the chamber. I am laying that on thick, because it might be the only nice thing that I have to say about the Conservatives for the rest of the afternoon. In the context of a constrained budget process—we have less time in which to scrutinise the budget in depth this year than we should have, as we all are aware—it is welcome that we have this additional debate the day before the budget is published.

However, the Conservatives’ motion appears to me to assert a point of principle that people in Scotland should not pay more tax than in the rest of the United Kingdom. It seems to me that, if that is being put forward as a point of principle, it is absolute absurdity. If that principle applies, an equally strong principle must apply south of the border that people in England should not pay any more tax than people in Scotland, Wales or Northern Ireland. In essence, they are arguing against the devolution of tax powers that they themselves voted for.

The current framework is far from perfect, but it does allow the Scottish Government, the Welsh Assembly, the Northern Irish Assembly and the UK Government to make tax decisions for Scotland, Wales, Northern Ireland and England, respectively. The Tories were involved in designing that system, so they cannot now credibly demand that the different jurisdictions not be allowed to use the powers that they have been given.

I wonder whether the Tories have reverted to their pre-1997 position, when they argued for a no-no vote—no not just to a Scottish Parliament but to any form of tax powers. I thought that the Conservatives had acknowledged since then that they got that one wrong.

With all respect, I think that Mr Harvie is being a little bit silly in this debate. Surely the point is that we now have a choice. We can make different choices. The choice that we on this side of the chamber think that we should make is not to have taxes higher in Scotland than elsewhere in the UK. It is open to other parties to put forward their choices. Surely that is a healthy thing.

I absolutely welcome the fact that we are finally able to have this debate, but if we take the logic that the Conservatives have to offer, through the laughable Laffer curve and all the arguments that we have heard from Murdo Fraser about it, no jurisdiction within the UK would think it permissible or advisable to have a higher tax rate than any other part of the UK. The logic of what Murdo Fraser is arguing for is in essence a locked-in race to the bottom. The Conservatives will not support any additional revenue generation, which means that they will support every single penny of the cuts that the chancellor has in store from now till the end of this Parliament. To hear Murdo Fraser lauding the wisdom and judgment of Alex Salmond—something that, I have to say, I would never do in the way that we just heard a few minutes ago—simply underlines the absurdity of his position.

The SNP’s plans involve a very modest increase in revenues. It now appears that, in light of the increases in inflation that everybody is predicting, that increase in revenues might be eroded. It might be even less than the SNP has been predicting. If the SNP is unwilling to shift from that manifesto position, which was written many months ago, it too will bear responsibility for the bulk of the cuts that are to come, in particular those at local government level. I remind Mr Wheelhouse that it is not only the party in Government in this chamber that has to live with the consequences of decisions that are made here. Everybody in Scotland will be living with the consequences. Local councillors—our colleagues in every political party across Scotland—will be living with the consequences, if we hand on the kind of cuts to local government budgets that are being predicted under SNP plans to date.

The other three political parties in this Parliament have all proposed ways of raising additional revenue, beyond the approach that the SNP has put forward. The proposals have varying degrees of fairness and would result in varying degrees of redistribution.

That brings me to my next point. Beyond tax principles and the tax revenues to come, there is a need for progressive taxation. The UK Government’s budget has had a deeply regressive effect. It takes a significant amount of income away from the poorest third of society. I remind Mr Fraser that those are the people whose pockets are being picked by the UK Government; they will be significantly worse off as a result of not just tax but benefit changes. The very minor adjustments in the autumn budget statement will not reverse that impact.

Meanwhile, the UK Government will give the richest third in society a significant increase in income. Everyone who earns above the higher rate threshold will be £178 a year better off, due partly to the change in personal allowance and partly to the change in the higher rate. It means 15 quid a month in the pockets of people on salaries like ours—people like MSPs and cabinet secretaries, for whom the extra money will make no difference at all to the quality of our lives. That extra money—even that modest sum—could make a massive difference to many people who are struggling to get by.

The Scottish Government could change course. It has the ability to recoup some of the money and ensure that higher-rate taxpayers do not get the benefit of the changes to not just the higher-rate threshold but the personal allowance. If it uses the higher rate, it can recoup money from wealthy people and generate revenues that are needed for the public services on which people—in particular, the poorest people in our society—depend.

There is worse to come in the years ahead for the poorest people in our society, unless we act. It would be scandalous, particularly at a time when those of us on high salaries are all preparing for our cosy Christmases at home while other people are struggling to get by and facing the festive season with nothing, if we did not take action with the powers that we now have to redress the injustice that has been done to date.

I look forward to hearing the case that is made for the other amendments—I do not have time to address them. I say again, if we do not see some compromise from the Scottish Government, I regret that we will have failed to seize the historic opportunity that is before us.

I move amendment S5M-03063.4, to leave out from “not” to end and insert:

“have access to high-quality public services; notes that the SNP’s manifesto proposals on tax make no significant changes to current income tax rates and thresholds; supports a tax system that will challenge inequalities in wealth and income; agrees that people earning below the median should pay less, while high earners should pay more than at present, and supports a long-term tax shift from income to wealth, where inequalities are greater.”

15:17  

I like Murdo Fraser. [Interruption.] I do. He knows that I do not agree with him on an awful lot, but I think that he can be an effective spokesperson for the Conservatives on finance.

He is blushing.

He is blushing, isn’t he? I have got him.

I believe that Murdo Fraser is just as good as Philip Hammond, if not better, so I cannot understand why he is saying that Philip Hammond should set Scottish income tax policy. Such low self-esteem in a man who is not normally short of confidence is a great surprise. Murdo Fraser should have more confidence in his own ability.

I am in favour of a United Kingdom in which power is shared, to enable us to reflect the varied nation in which we live. I believe in a federal United Kingdom. That is why I reject the Conservative position in the motion, which is that nothing should be different in Scotland and nothing should be decided here—everything should be determined by the Conservative chancellor in the House of Commons. Patrick Harvie was right to say that the motion is a throwback to the 1990s position, when the Conservatives were anti-devolution.

The Conservatives are saying that everything must be the same across the United Kingdom; worse than that, they say that the Conservative chancellor should set Scottish income tax policy, when he will have absolutely no responsibility for the consequences of that decision. He will set the policy, and we will blindly follow it—and we will feel the pain if it all goes wrong. That is an abdication of responsibility, which is why I reject the Conservative motion.

The second flaw in the Conservative argument is the apparent belief that all tax increases are negative and have no benefit for the economy. People who listened to the Conservatives would think that the only way to boost the economy is to cut tax.

I favour cutting taxes. I note that Murdo Fraser took credit for the increase in the tax thresholds, which only the Liberal Democrats had in their manifesto in 2010. He took credit for that because it is right to cut taxes for those on low and middle incomes, or to take them out of tax. That was the right thing to do, but we did it on the basis of making the system fair rather than because of a right-wing agenda to reduce the size of the state.

I do not believe that all tax is bad. Taxes pay for the public services that we all value and for the services that help to boost the economy. Liberal Democrats believe that income tax should be raised by a modest 1p, so that we can invest £500 million in nursery schools and colleges. That small increase for a big return has a clear purpose.

Will the member give way?

Not just now.

Will the member give way?

No.

In the past two weeks, we have seen the catastrophic consequences of the failure to direct Scottish education in the right way. We used to have one of the best education systems in the world but, according to the programme for international student assessment—PISA—it is clear that we are now just average. Now is the time to do something about that.

We have new powers coming down the track, but it seems that we will fail to use them. I think that that would be a failure of our responsibility. It is wrong simply to say that we must match the rest of the United Kingdom on income tax and forget about the other side of the equation—the boost to education that we require and which will move us from having an average education system to having a top-quality education system, and from having an average economy to having a top-quality economy. I want that change to happen.

Will the member give way?

I will give way to my favourite politician.

I will try to avoid blushing further.

Mr Rennie makes an interesting case with regard to education. However, would he care to reflect on the fact that, in England, education per pupil is far less well funded than it is in Scotland, yet results in England are surpassing those in Scotland? Is there perhaps a broader issue than resources that must be addressed?

Of course a wider package of measures is required. Clearly, however, the challenges in Scotland are greater, and that is why I believe that we must have the investment to match. It is quite clear that Scottish education authorities are struggling with their finances and that there have been drastic cuts to schools. We need to make a difference in order to close the attainment gap. To deny that is to deny reality.

My final argument concerns the fact that the Conservatives present themselves as a low-tax party, but they forget about all the stealth taxes that they propose to introduce. To be fair, they want lower income taxes, but they support a number of more regressive stealth taxes. For example, the council tax in England is rising by up to 6 per cent over the next two years. Perhaps employers would have something to say about the increase in national insurance contributions from those who earn £45,000 a year and just below that level, which represents a big increase of roughly £200 for someone on that wage. That is a proposal from the Conservatives but it is not something that they boast about. The apprenticeship levy is not additional funding for training; it is a replacement of the funding that we already have. Dare I mention the prescription charges and tuition fees that the Conservatives are desperate to introduce in Scotland? All those things represent stealth taxation rather than taxation that is up front, transparent and progressive, which is what income tax is.

My proposal is that we should reject the Conservatives’ throwback to the 1990s. Ruth Davidson’s political hero is John Major. He was famously, or infamously, in favour of 22 Tory tax rises—those who were around in that era will remember those stealth taxes—and was booted out of office immediately after he proposed them. However, we have also heard today that the Conservatives want us just to blithely follow what the Chancellor of the Exchequer in London wants to do—an anti-devolution stance—and that they reject the proposal that we should invest in our economy through investing in education. Truly, we are looking at a Conservative Party that has gone back to the 1990s and is not the moderate Conservative Party that it likes to present itself as.

I move amendment S5M-03063.2, to leave out from “families” to end and insert:

“investing in skills is the best way to strengthen the economy, and calls for a modest penny on income tax for this purpose, raising £500 million to transform Scottish education.”

We now come to the open speeches. We are very tight for time, so speeches should be no more than six minutes.

15:24  

Einstein said:

“The hardest thing in the world to understand is the income tax.”

Harder to understand is the logic of making Scotland the highest-taxed part of the UK. Put bluntly—because, in among all the stats, facts and caveats, these are real people, real businesses and real families—more money will come out of the pockets of hard-working people, families and businesses north of the border than south.

I know that the SNP needs money: those PISA figures—for the programme for international student assessment—are not going to fix themselves. We know that the SNP Government has wasted nearly £1 billion on department and project overspends, but can it tax us to prosperity?

There are two ways to see that the answer to that is no. First, when George Osborne reduced the 50p tax rate to 45p, it raised £8 billion extra for the Exchequer. The top 1 per cent of earners now pay 28 per cent of all income tax. However, Nicola Sturgeon said that it “would be reckless” to go to a 50p tax rate; and Derek Mackay agreed in a response to the autumn statement—he said that it would lose money.

Secondly, Andrew Wilson, the economist who chairs the SNP’s growth commission, says that the best way to “sustainably” double revenue from the top bracket is to double the number of taxpayers in Scotland who are wealthy enough to pay it—increase the tax base and that increases the tax take.

Will the member give way?

No—not with the time constraint.

The decision by the UK Government to raise the 40p threshold to £50,000 was taken because, at present, it unfairly targets senior teachers, policemen, nurses and entrepreneurs: the very people we need to attract to Scotland. The chancellor was right when he said that internal migrants

“paying significantly higher taxes in Scotland ... will be a factor in their decisions about whether they want to come and make their careers in Scotland.”

A survey by the Confederation of British Industry shows that two thirds of Scottish businesses expect to struggle to fill high-skilled vacancies. In NHS Grampian, there are 36 consultant vacancies and 445 nursing and midwifery vacancies. There are 1,000 fewer teachers in Scotland today than there were in 2010, and there are 16 fewer general practitioners in the Grampian area than there were in 2010.

The Courier reported this morning that Brechin has the most vacant shops in Scotland, with a quarter of them now lying empty. When an innovator, an entrepreneur or an investor has an idea for a business, will she locate it in Brechin, Bervie or Banff, where the Government will punish her for success, or will she locate it in Newcastle, Norwich or Nottingham?

When a mid-senior nurse considers where it would be best to base himself for a successful career, will he choose Stonehaven, where he can expect the Government to take 40p out of every pound that he earns, or Sunderland, where he will not have to worry about that until earning at least £50,000? Simply put, there is no reason why someone doing the exact same job in Scotland as in England should pay more. It is not fair.

I have talked about the north-east.

Will the member give way?

No.

We need people in the north-east. On virtually every visit I go on, businesspeople say, “I cannot get people to move here because the cost of living is too high.” Why? Because the north-east of Scotland is being targeted for a council tax raid, with half of all residents in towns such as lnverurie, Ellon and Westhill in modest family properties facing an increase to pay for services in the central belt—and that is before their household water and sewerage charges rise by 1.6 per cent; because of a large business supplement that, according to Liz Cameron of the Scottish Chambers of Commerce today, puts Scottish businesses at a competitive disadvantage compared with their counterparts in England and prices local people out of their own high street; because of an increase in land and buildings transaction tax, which, as we have heard, has slowed the local market; and because of a £15 million per annum new water charge for businesses. Now, those same individuals are about to see their colleagues in England and Wales benefit from a tax cut, as the UK Government raises the tax threshold. They might as well put up a sign on the A90 saying “North-East—closed for business.”

Oh, that’s a great message!

Members: It is your message.

Just yesterday at the Economy, Jobs and Fair Work Committee, Di Alexander, chair of the Scottish rural fuel poverty task force, said that if people save money on bills, it is “back in their pockets” and they can spend it in the local economy. He is right: increase consumer spending and that increases VAT receipts. A 5 per cent growth in VAT, above that in the UK, would give an extra £250 million for Scottish public services.

There is no practical reason to make Scotland the highest-taxed part of the UK. If the Government does that, people will spend less, prices will go up, people will leave, jobs will remain unfilled, services will suffer, tax take will go down and, ultimately, we will all lose.

Families and businesses in Scotland should not be taxed more than those elsewhere. We do not raise money by endlessly taxing people more heavily. We do not make the wealthy shoulder more of the burden by punishing them; we should encourage them to generate more and to live and work in Scotland. It is unacceptable to demand that middle-income earners should shoulder ever more of the burden of running the state simply to pursue an ideological obsession.

If this Government really backs progressive taxation and really wants to promote aspiration and Scotland as a place in which to invest, to do business and to live, it would be backing the UK Government’s plan to increase the 40p tax threshold, but it is not, which tells us all we need to know about the Scottish Government and its attitude to the hard-working people of Scotland.

15:30  

Before I begin, I should say that I am the parliamentary liaison officer to the Cabinet Secretary for Finance and the Constitution.

Having six minutes to speak on taxation is a much nicer proposition than sitting hours of tax exams; I speak from experience. As waves of political regimes have come and gone, altering and changing tax to suit and advance their political agendas, layers on layers of tax legislation have built up into the exam subject of every poor trainee accountant’s nightmare. Perhaps, however, that is not as much of a nightmare as getting basic arithmetic embarrassingly wrong on the first pages of a public report—such as the one that the Tories released this week, which told me less about Mackay’s millions and more about how the Conservatives cannot count. That might be why they have not counted how much, according to the Resolution Foundation, a dual-earning couple with three children are set to lose under this UK Government—it is more than £3,000.

I ask members to indulge me as I simplify tax for my own sake and for the Tories. For all the debate, a Government’s tax policy is a window into the engine room of an administration—I would argue that it shows where a Government wants to go, how it wants to get there and why it is going in the first place. We should stop and think about who has actually moved on tax—it is not us, but the Tories. They have increased the thresholds to reduce the tax burden on the highest earners, and we will certainly not be following them where they have gone.

I am interested in that point. The Conservatives at UK Government level are certainly proposing to increase the higher-rate threshold more, but the Scottish Government proposes to increase it somewhat. What is the rationale for doing that when it still represents a tax cut for high earners?

The basic answer is inflation. We are not moving the threshold except for in line with inflation, which makes perfect economic sense to me.

The majority of Scottish voters are not following the Tories where they have gone, as those voters delivered a resounding verdict on the Tories’ tax plans in the elections by returning a third SNP Government.

Will the member give way on that point?

My time is really limited—sorry.

That there should be tax differences between Scotland and the rest of the UK should hardly come as a surprise. The Conservatives have had time to adjust to the notion of devolution of tax powers since November 2014, when the Smith commission recommended that this Parliament should have the power to set taxes. In fact, the Conservatives have had even longer—since 2010—to adjust to the idea that their Westminster colleagues believe that fairness comes in the form of inheritance tax cuts for millionaires and those in higher tax brackets who are living comfortably. Since 2010, the only income tax rate that the Conservatives have cut is the additional rate, from 50p to 45p. As I said, tax is a window into political priorities.

The Resolution Foundation estimates that the Tory policies that have been announced since the 2015 election mean that the poorest 10 per cent of households will lose on average around £400 a year, while those in the richest 10 per cent of households will gain around £200 a year by 2020-21.

There is a subtle hypocrisy in the Tories’ outrage and accusations. First, they are, as Willie Rennie pointed out, the party of hidden taxes: they tax the sick with prescription charges; the emergency services with different VAT arrangements; and learning with university fees. If they want to talk about economic growth, that is absolutely fine—so do I, but with one additional word, which is “sustainable”. We want sustainable economic growth, not growth that widens the gap and entrenches poverty or growth in the bank balances of a handful.

Helen Barnard of the Joseph Rowntree Foundation said:

“The UK economy is not working for low-income families. The economy has been growing since 2010 but during this time high rents, low wages and cuts to working-age benefits mean that many families, including working households, have actually seen their risk of poverty grow.”

There are two types of growth.

The second hypocrisy is in the UK Government’s claims that it supports businesses. Is that all business or just big, global business? It cannot even provide certainty around the single market right now. For all its talk about lower income tax and corporation tax, the Westminster Government goes nowhere near supporting businesses as the Scottish Government does, particularly small and medium-sized businesses, which are the backbone of Scottish society. We have promised to expand the small business bonus scheme and lift 100,000 properties out of rates altogether.

If I learned anything in those painful tax exams, it was that tax is only ever one side of the balance sheet. We can choose what goes on the other side. There is no other side to the Conservatives’ motion; as Kezia Dugdale said, it is concerned only with money. However, this nation now has the powers to turn the tide on the Tories’ regime in Westminster, and that is precisely what we intend to do.

15:36  

At the heart of this debate is the very essence of the devolution settlement. This Parliament was created to reflect the views of the people of Scotland and to bring decision making closer to home, as a democratic Parliament with a voice to shape Scotland and a voice for the future. It is now a Parliament with more power than we have ever had before, and nowhere is that more evident than in our new financial arrangements. Now is the time for real, grown-up politics. We are no longer just spending the money that somebody else gives us; we have responsibility for raising much of that money too. Balancing our budget just got much more complicated, but the choices are ours to make; there is no one else to blame. Politics, after all, is all about choices.

Tomorrow, the SNP Government will set out its choices. Its budget is likely to be an austerity budget, passing on Tory cuts instead of using its new powers to invest in the future of our country. Although I am not holding my breath, I live in hope that I am wrong.

You might be.

I look forward to hearing the cabinet secretary’s budget speech and I will hold him to account on it.

When we voted to establish the Parliament, we voted for it to have tax-varying powers. I know that the Tories campaigned against devolution—it might be uncomfortable to remind them of that—but devolution was about doing things differently if we chose to do so. Scottish solutions for Scottish problems was the mantra of the day, but the premise of the Tory motion before us is that everything must stay the same. We need to choke on their austerity plans and not do anything to help the poorest in our society or the JAMs—the just about managing. We have not to have better public services. We have not to aspire to do more.

I remember that the Tories set two fiscal rules under their former chancellor. They failed to meet either of them, so what does the new chancellor do? He simply replaces them with easier targets. It is disappointing but hardly surprising.

As Jackie Baillie knows, Jeremy Corbyn supports the Tory chancellor’s increase in the threshold for the 40 per cent rate. Does she think that Jeremy Corbyn is too right wing, too?

That is certainly not what I think, but I say to Mr Fraser that Jeremy Corbyn would respect devolution, and it is about time that the Tories did too.

The bare-faced cheek of the Tories is quite astonishing, given that the Scottish budget for this year shows a 3.5 per cent real-terms decrease and that there is expected to be a cut in the order of more than £1 billion over the course of this session of Parliament. The Tories may be content to pursue austerity policies, hurting working people and families across the country, but it really is audacious to suggest a cut in air passenger duty—a tax cut for frequent flyers. In that, they join the SNP in a new taxpayers’ alliance—it wants to do the same thing. They need to tell us what they will cut due to the loss of revenue.

I turn to the Scottish Government. I am disappointed that the SNP talks about being progressive but does not act in that way. We have an opportunity to end austerity, stop the cuts and make different ideological choices from those the Tories make.

Will the member give way?

No—I do not have time.

I am an eternal optimist and I hope that Derek Mackay steps out of John Swinney’s shadow and refuses to be a conveyor belt for Tory cuts. I hope that we see boldness and leadership rather than the SNP meekly following the path set out for them by the Tories.

If the SNP was growing the economy and the tax base, I might have more sympathy, but the truth is that the economy is stagnating. Virtually all forecasters have downgraded their forecasts for economic growth. The rate of growth in Scotland is less than that in the rest of the UK, and the same is true across a range of economic indicators. We have missed our productivity target and we are likely to miss our export target. Today, we find that economic inactivity is rising yet again. A key determinant of future revenues is, of course, wages, so it must be very worrying for the cabinet secretary that wage growth has slowed and is less than it is in the rest of the UK.

The greatest investment that we can make in growing the economy is to invest in people. The better skilled and better educated the workforce is, the higher paid it is. That is why we want to have a 50p top rate of tax for those who are lucky enough to earn over £150,000, with every penny raised being invested in education, so that we can start to build the economy of the future.

The SNP will unveil its budget tomorrow. It is Derek Mackay’s first budget as finance secretary. Will his approach be to nurture and grow the economy and public services, or will he follow in the footsteps of John Swinney and slash and burn? I remind members that the finance secretary has form. When he was leader of Renfrewshire Council for four years, he cut, cut and cut again. There were over £5 million in education cuts, to teachers, classroom assistants, pre-five education and school transport, and there was a similar range of cuts in social care. In fact, I have six pages describing cuts by Derek Mackay when he was leader of Renfrewshire Council.

It is not too late. Derek Mackay does not need to be Scrooge at Christmas; he has a choice—he can bring forward an anti-austerity and progressive budget that helps all of Scotland. Make no mistake, though, if he presents a budget of cuts, those will not be Tory cuts; they will be SNP cuts. Tomorrow will, indeed, be interesting.

15:42  

I remind Parliament of my role as parliamentary liaison officer for the Cabinet Secretary for Economy, Jobs and Fair Work.

I am delighted to take part in this Conservative Party debate, which is headlined as being about taxation but is, in reality, about something else. In the coming weeks, we will have the opportunity to debate Scotland’s budget, and the various parties in this place will repeat oft-used lines, manifesto commitments and policies. Many members will also do that today, but I want to focus on the issue that lies at the root of the Tory motion.

The motion does not seek a debate on taxation and it does not challenge taxation decisions that the Scottish Government has made. It does not attempt to comment on the programme for government or the manifesto on which the SNP was elected. It does not propose alternative tax policies and argue for their adoption. It simply states that Scottish taxation should be no higher than taxation elsewhere in the UK. In doing so, the motion advances the propositions that Scottish taxation policy should be tied to the taxation priorities and policies of the UK Government, and that whatever we decide to do in Scotland should be constrained by Tory policies in Westminster.

The motion seeks to remove from our Scottish Parliament the flexibility to raise more when that makes sense and to incentivise where that is needed. It seeks to undermine the concept of a distinctly Scottish approach to taxation—to constrain the ability of the Scottish Parliament to decide on and implement taxation policies in Scotland that are distinct from those in Westminster. That is because the Tories, in their hearts, have no interest in a distinctly Scottish approach to taxation.

However, Scotland, through the ballot box, has made clear its views: it has given the Government the mandate to forge a different Scottish path. In Scotland, 100,000 small businesses benefit from the small business bonus, which is part of a distinctly Scottish approach to taxation. Council tax bills in Scotland are lower than those in the rest of the UK, and higher-value properties now carry more of the burden than they would in the south, which is also part of a distinctly Scottish approach to taxation.

Ivan McKee mentioned the small business bonus scheme. Is he aware of any analysis of its benefit that he could share with Parliament?

I have spoken to many small businesses in my constituency that are very grateful for the small business bonus scheme. Mr Findlay is advocating that it is not a benefit to those businesses.

We have a commitment to raise the threshold at which taxation starts above that which is planned by Westminster. That will pull more lower-paid earners out of the taxation system in Scotland than will be the case in the rest of the UK. We have a shift in the thresholds for higher-rate taxpayers, which will generate an extra £1.2 billion for public spending in Scotland over this parliamentary session. We have a different approach to property transaction taxes, which is giving support to first-time buyers and shifting the burden to the top 7 per cent of transactions. All those and more are parts of the move towards a distinctly Scottish system of taxation.

The whole point of a distinctly Scottish system is that it is not constrained by being tied to the tax policies of another Parliament in another place. The current devolution settlement limits our fiscal policy in so many ways. It denies us the ability, for example, to decide on corporation tax rates for Scottish businesses, which prevents us from raising funds for investment when that is appropriate, and from providing focused support to businesses when that is needed. The devolution settlement prevents us from designing taxation policies to support our industries—whether it is the oil and gas sector or an emerging industry such as renewables—and it denies us the opportunity to vary rates of national insurance, for employees and employers alike, either to incentivise job creation or to support extra investment in public services.

The current devolution settlement even denies us the power to define “income”, which prevents us from legislating for tax on savings and constrains our ability to co-ordinate income tax with dividend tax, thereby severely restricting our ability to shift the tax burden to top earners. In short, the tax powers that we enjoy are limited, partial and far from what is necessary to enable us to drive forward our economy in the best interests of the people and businesses of Scotland.

Even those limited taxation powers are too much for the Tories. The Tories, through their motion, show their true colours. Laid bare is their desire to constrain the powers of the Scottish Parliament. The motion says, “Never mind developing taxation policies specific for your needs and priorities, Scotland. Just go back to eating your cereal and leave the hard sums to someone else.” That is why the Conservative Party will never occupy the seats of the governing party here. The people of Scotland understand that the Tories’ commitment to devolution—their commitment to standing up for Scotland—is only skin deep: they are the Conservative and Unionist Party.

I know that it will be difficult, but I ask members to imagine Ruth Davidson and Murdo Fraser drafting a Scottish budget. The hotline to number 11 Downing Street would be ringing off the hook. North British Tories—less autonomous than even the Labour branch office—would have to seek permission for every dot and comma. Every policy would be run through the Treasury and be subject to veto by their Westminster masters.

We should not be surprised. The motion comes from the party that has opposed devolution from the outset. It is the party that has stood against additional powers every step of the way. It is the party that drew lines in the sand and stood firm, like King Canute, against giving more responsibility to the people of Scotland, until the waves of Scottish public opinion washed the lines away.

Now we see the Tories exposed—unwilling to trust the people of Scotland to make fiscal decisions for themselves. The people of Scotland in return are unwilling to trust the Tories to have their best interests at heart. Members should vote for the amendment in the name of Derek Mackay and reject the Tory motion.

15:48  

I was a chartered accountant in my life before I entered Parliament, so I know very well the consequences of increased costs on business and the effect that they have on businesses’ ability to create jobs and prosperity. As a working mother, I am well aware of the stresses of increased demands on family budgets. The SNP Government is taking decisions that are damaging to business and families, and my fear is that unless it drops its anti-business agenda the situation will only get worse. Business must be competitive and must be able to compete on a level playing field.

When compared to the economy in other parts of the UK, how does Scotland’s economy fare under the SNP? Growth in gross domestic product is barely half of that in the rest of the UK. Business confidence is lower than it is in other parts of the UK. Inward investment fell by almost 10 per cent in 2015-16, while in the rest of the UK it rose by more than 11 per cent. What about financial services? Speaking to the Finance and Constitution Committee, the director of the Institute for Public Policy Research Scotland said:

“In the financial services sector, we have seen the withdrawal of high-skilled jobs from Scotland to elsewhere in the UK”—[Official Report, Finance and Constitution Committee, 16 November 2016; c 24.]

Retail sales are falling, which has earned the comment from the director of the Scottish Retail Consortium that the SNP needs to keep

“a firm grip on personal tax rates”.

Only last weekend, a major Scottish newspaper reported:

“Scottish businesses are in limbo and putting investment plans on hold as they nervously await possible tax hikes in 2017”.

Those tax hikes will not come from Westminster, but will be home-grown tax hikes that are conceived and hatched here in Scotland by the SNP. New provisional levels of business rates will do nothing for the competitiveness of Scottish companies.

Will Alison Harris take an intervention?

I am too short of time.

Property consultancy JLL has warned that the changes will extend the competitive disadvantages of businesses in Scotland compared with those in the rest of the UK. David Burke, director of rating at JLL has said that

“If Scotland wants to restore a competitive position it must at least match England and Wales by cutting the poundage”.

Will the Government listen to that expert advice? The cabinet secretary has walked out of the chamber, but we shall know next month. I, for one, will not be holding my breath.

The First Minister recently visited Dublin, where, I hope, she heard how low tax rates have helped to transform the Irish economy. The current worldwide trend to reduce corporation tax underlines the importance that Governments of all persuasions see in stimulating businesses and driving economies through low tax.

Will Alison Harris take an intervention?

I am sorry. I am too short of time.

Scotland cannot ignore those trends and become ever more uncompetitive for business, but in many respects that is exactly the message that the SNP is sending out. Business is listening with alarm. Is it any wonder that the number of business start-ups in Scotland lags well behind that of other areas of the UK, or that companies that would, at one time, have registered in Scotland and been proud to contribute to the Scottish economy are now registering in England? After all, for many, England is the major market and differing tax rates are a huge concern to businesses—especially in today’s global marketplace.

As an accountant, l know that differences between tax regimes in Scotland and England will inevitably create complexity and additional costs for business. That is good for accountants, but bad for creation of jobs and prosperity, both of which come from successful businesses.

On personal taxation, the Scottish Government’s policy to freeze the higher-rate tax threshold will leave more than 350,000 Scots with less take-home pay than their peers who are doing the same jobs in England. That means £130 million being taken out of the pockets of hard-working families by the SNP. What message does that send to the skilled workers that our economy needs—to the dedicated senior teachers, nurses, doctors, and police officers, and to people in medical research who are doing fantastic work to find drugs to eliminate the scourge of cancer? Those people have such expertise and skills that other countries are determined to attract them. Many people will perceive that Scotland does not value such people, because they are dismissed by the SNP as “the better off” and are undeserving of the same incentives that are being given by the UK Government.

Will Alison Harris give way?

I am sorry. I need to keep going.

Kenneth McEwen, who is a tax director at Henderson Loggie chartered accountants, wrote recently in The Scotsman about the risk of many of Scotland’s top earners moving south due to being hit by higher personal taxes, and because of higher household taxes and the increased costs through the land and buildings transaction tax that are hitting many residential properties, particularly in places like Edinburgh. Increases in council tax are hitting families in larger properties and those who occupy homes in bands E and F. So much for a Scotland that welcomes and nurtures the best and the brightest. So much for keeping Scotland competitive.

Will the Government listen to SNP economist Andrew Wilson on the need to incentivise people? He reminded us that changes in tax can lead to less revenue, as has been the case with the LBTT. Will his be a lone voice?

I am glad to say that the message that my party is sending out is very clear: Scottish people should not be penalised by the actions of the SNP and should not pay more taxes than people elsewhere in the UK pay. I fully support the motion.

15:54  

I am delighted to speak in this debate on taxation and to follow a fellow CA. I believe that we are the only two in the chamber.

I have to say, however, that my views will be very different to hers because I believe that taxation is a very good thing. Taxation is what makes our society civilised and contrasts us with the jungle, where the strong get stronger and the weak are abandoned. Because of taxation, we have a national health service, free school education, roads, railways, a police service, an ambulance service, a fire service, an army, a navy, an air force, a courts system, social work services, and local services including parks and refuse collection. The list could go on. I hope that I have said enough to show that I am very enthusiastic about taxation.

On a personal level, when a person is thinking about buying a house, they start by thinking about how big it needs to be and where it should be. People should not start by thinking about how they can outdo their mates and show off how their house is better than their mates’ houses.

Similarly at national level, when we talk about taxation our starting point should be the services that we want and need, and therefore the level of taxation that we need. Our starting point should not be comparison with our neighbours—although I accept that such a comparison can be a relevant factor.

As our society has grown and developed, we have wanted and needed more public services. Care for the elderly and care for children are now seen as shared societal responsibilities, and not just as duties on individual families. It therefore seems to me to be logical that as our needs and demands increase, so our level of taxation needs to increase to pay for them.

To be fair to the Conservatives, I say that they raise a valid point: we have to think how our taxation level compares to those of neighbours. If our taxation is higher and our public services better, richer people may leave because they need fewer public services and may not be willing to pay more tax. I accept that we cannot ignore taxation levels in England, the Netherlands, the United States, Australia and other countries that might attract our people. However, having been on the Finance Committee previously, I know that there is fairly widespread agreement among experts that a couple of percentage points difference between the tax rates of Scotland and England is unlikely to mean that many people will moving the location of their homes.

Why do people choose to stay in Scotland, to come to Scotland and to live in Scotland? There are many factors. It may be that they have family close by, or it may be the friendliness of the people, that their jobs are here, or that there are good public services—schools, universities and the health service. Taxation can definitely be one factor, but it is seldom the main one.

The case for businesses is similar. They locate close to customers, or to where there is an educated workforce and good transport links. Again, taxation will be a factor, but it will be only one among many. I can hardly imagine that Tesco or Debenhams will close down all their stores in Scotland because their profits after taxation are a few pounds lower.

It is very sad that John Mason is no longer a member of the Finance Committee. He will perhaps not be aware that only last week the tax adviser to the Finance Committee gave evidence saying that when Catalonia put up taxes, 5,000 businesses moved from Barcelona to Madrid.

Adam Tomkins missed being on the previous Finance Committee, which heard that the Swiss cantons, which are very close together, have quite different rates of taxation, but people do not move very much.

As I suggested at the beginning of my speech, being fixated on one’s neighbours is not a healthy state of mind. Of course we want to be aware of what the competition is doing; we are interested in how the folk next door are decorating their house or what they are growing in their garden. “Keeping up with the Joneses”, however, is not a good mindset, in my opinion. It is a somewhat sad lifestyle choice to think that the quality of one’s life is based on comparison with others. Surely it is better when we choose to live in our own way—in the way that we want and which we are comfortable with.

Are we actually very different in taxation from the rest of the UK? No, we are not. We introduced LBTT and landfill tax, which are somewhat better than, but not dramatically different from, the rest of the UK. Business rates are slightly different and income tax has so far been much the same.

So first, let us not pretend that we are hugely different from England. The Tories risk damaging Scotland by overemphasising the differences—but then again, maybe the Conservatives do not mind if they damage Scotland, as long as they keep their beloved UK together.

My opinion is that I would go further in raising tax for better public services and for a more equal society in the medium term. I accept that we can go only so far in the short term, and that the public has not shown a great appetite for tax increases. We live in a democracy, so what the public says must go.

Is John Mason aware that the most popular policy during the general election campaign was Labour’s policy for a 50p top rate of tax?

For better or worse, Labour did not do very well in the election. I am going to run out of time.

I would like three things: combined income tax and national insurance, a much simpler overall system and the whole system being made more progressive. At the moment, people start on 32 per cent—20 per cent income tax and 12 per cent national insurance. The top rate is, in effect, 47 per cent, which is 45 per cent income tax and 2 per cent national insurance. I do not think that that is nearly progressive enough.

In closing, I return to my main point. We face many challenges for the health of many citizens, we have an ageing population and we want to improve our young people’s start in life. Dealing with all those issues costs money and will continue to cost money. If we are serious about improving lives in Scotland, we must be prepared to pay for that. The fairest way of doing that is through taxation.

16:00  

This is a Conservative Party-initiated debate, and it was Ruth Davidson who said on 24 February 2015, on the formation of her independent commission for competitive and fair taxation:

“We need to start thinking big ... As the new tax powers come to the Parliament, we need to send out a big, bold message through our political choices”.

Is this one-line motion the result? Is this it—this denial of devolution? This negation of the right to be different, to dare to be different, to stand up to austerity and to properly invest in public services and the economy? This is not bold and big; this is small minded and timorous.

I make it clear that our motion says that

“families ... in Scotland should not be taxed more than those elsewhere in the UK.”

We are very happy for tax to be lower in Scotland than in the rest of the UK.

There we have it.

It is part of an ideology that we should be familiar with. Once again, the only industrial policy and economic programme of the Conservative Party is a tax cut. This is not a serious policy for jobs and growth. It is a recipe for inequality and division; it is a recipe for unemployment and disinvestment. Under the Tories, we—I do not mean Scotland; I mean the working people of this shared island—are part of an experiment. It is an experiment in which we are wrenched out of the European Union and plunged deeper into an ocean of austerity, in which the currents are engineered to hit hardest and to drag under the most vulnerable in our society—the ones who are least able to bear it.

Not only does this fiscal imperative corrode the very threads of the social fabric that bind us together. Worse, it is a dismal economics that sets out to redistribute the nation’s wealth not from each according to their means to each according to their needs, but from each according to their poverty to each according to their wealth. It is an ideology that demands that the rich get richer and the poor get poorer, modelled on a failed, trickle-down economics that is built on quicksand foundations of self-interest and selfism, not strong foundations of social cohesion and solidarity.

That is why the Labour Party is prepared to act. It is no good talking about the politics of anti-austerity or the construction of an anti-austerity alliance only while in opposition; in government, we must stand by those principles, too, and not simply pass austerity on. We did not campaign all those years, in the Labour and trade union movement and in wider civic Scotland, through the Scottish constitutional convention, to create a Scottish Parliament that would simply be a conveyor belt for Tory policies and Tory austerity. Quite the opposite—we campaigned for a Scottish Parliament to be a bulwark against Tory policies and a bulwark against Tory austerity, in order to find, as Jackie Baillie said, Scottish solutions to Scottish problems.

The SNP has said that it wants to forge its taxation policies according to the principles of Adam Smith. However, as the Poverty Alliance pointed out in its briefing for the debate,

“it is surprising that the principles suggested for Scottish taxation do not mention fairness”.

Well, I agree with the Poverty Alliance. I ask the cabinet secretary: what about the principles of equity and the principle of equality of sacrifice?

On that point, will the member not reflect that one of the principles is around tax being proportionate to the ability to pay, which is absolutely what we have followed on the new devolved taxes?

I support the principle that the proportion of income taken in tax should rise with the level of income, not simply be directly proportionate.

Those are sound principles of fairness, and the Labour position is distinctive. We need a higher top rate for those who are earning over £150,000 a year. This week, we are not starting to consider a shadow budget based on normative principles—

Will the member take an intervention?

I do not have time, I am afraid.

We are deciding on a real budget, in which we can make positive choices. To members of this Parliament—from all parties—I say that we cannot turn our back on the homeless, or on our old-age pensioners, half of whom are living in fuel poverty this winter. We cannot turn our back on people desperately looking for work with unemployment climbing again. We cannot turn our back on the funding crisis in our national health service, the closure of services and the hard-working staff who deliver the service in the NHS, because everyone should receive the best possible medical treatment free at the point of need. We cannot turn our back on investment in our schools and colleges, and in our people, because every young person deserves an education to fulfil their potential.

This is a battle of ideas. It is a battle in which we are certainly on the opposite side to the Tories; I fear that we may be on a different side from the SNP, too. We will make our speeches and members may vote down our amendment, but we will keep making these arguments because they are the right arguments, and one day this minority in favour of them will become a majority.

Equality; justice; real change. That is what the Labour Party is arguing for this afternoon. We call on all good people of conscience—inside and outside this Parliament—to join with us.

16:06  

With new powers on the way, there has never been a better time to think about the type of Scotland that we want to live in and how we achieve that. It was noticeable that Murdo Fraser did not mention the small business bonus scheme, which has been hugely beneficial to more than 100,000 small businesses.

For the SNP Government, getting the Scotland that we want means tackling poverty and inequality. A fairer taxation system is part of that. Our income tax proposals for 2017-18 and beyond will not only protect low-income taxpayers, but generate extra revenue to help businesses and invest in key public services. Tourism revenue is growing, and it is certainly becoming an increasingly important part of the local economy in my constituency.

The control of APD is coming to the Scottish Parliament in 2018. The Tories have called for the tax to be abolished for all flights longer than 2,000 miles, to incentivise airlines to provide new direct links from Scotland to the rest the world. The Tories have also called for an immediate freeze in APD on short-haul flights to the UK and to Europe. However, that flies directly in the face of what the Tories claimed earlier this year during the Scottish Parliament election campaign. In their manifesto, the Tories called for varying levels of APD to increase in price with longer-distance flights. Why the sudden change of heart? Have they suddenly come to their senses or is it another case of flip-flopping, as we have seen with Brexit?

Mr McMillan started by speaking about tackling poverty. Richard Leonard has just told us that half of pensioners are suffering pure poverty. How will cutting APD tackle that?

If Mr Kelly listens to the rest of my speech, I will come on to a few points that address that issue.

Tourism expenditure could be between £56 million and £68 million a year, resulting in between 1,200 and 1,500 additional jobs and between £47 million and £58 million in gross value added to the Scottish economy.

In the past six months since the European Union referendum, there have been clever arguments to make about how we can try to mitigate the worst of the looming damage that Brexit will inflict and help to stimulate the economy. Meanwhile, the rest of the world looks on at the Tories’ pantomime politics on Brexit with bemused perplexity and irritation.

As the Tory broken promises pile up, the economic plan for the rest of this decade has been laid out by the chancellor, Philip Hammond, and it equals austerity light—but for even longer. During the chancellor’s autumn statement, we learned that stagnant wages and falling living standards will become the reality.

Despite that, the Tories have earmarked substantial funding for their white elephant projects. The total lifetime cost of the planned Hinkley point C nuclear power plant could be as high as £37 billion, according to an assessment published by the UK Government. We have also heard that the overall cost of the high-speed 2 project has increased from £50 billion to £56 billion.

The renovation of the Houses of Parliament is set to cost anywhere between £3.5 billion and £7 billion. Let us not forget, either, the attempt to cut Scotland’s budget by more than £7 billion that the UK Treasury made earlier this year in the fiscal framework negotiations. If it were not for the First Minister and John Swinney having direct discussions with the then Chancellor of the Exchequer, George Osborne, our budget would have been cut by a further £7 billion by the Tory Government.

In the post-Brexit referendum debates, it has been suggested by some Tories that the royal yacht Britannia should be recommissioned to encourage trade, and we should not forget that the taxpayer is divvying up the tab for the refurbishment of Buckingham Palace and the abhorrent replacement of Trident nuclear weapons. The waters of anxiety are rising throughout Europe and the Tories’ response is, “We’re going to need a bigger boat.” That bigger boat will be needed to carry the record £1.79 trillion of national debt and the rising level of destitution.

Our approach to how to grow the economy could not be more different from that of the UK Government. A hard Tory Brexit will cut trade, cost jobs and lower living standards, yet for week after week in the Parliament the Tories have voted against continuing membership of the European single market. The Scottish Government, on the other hand, set out in its programme for government strong ambitions for the NHS, early years, closing the attainment gap and supporting businesses. The Tories want to roll back the gains of devolution that have helped so many families. The one-nation mantra of the Tories lives on, despite the comments that were made earlier. I remind the Tories of a comment that was made by the Prime Minister in June this year in her pitch to become leader of her party:

“This programme—true to my party’s proud philosophical tradition of one nation—will include big change to the way we think about our economy, our society and our democracy”.

In stark contrast to the inaction of the UK Government, the SNP Government has taken action in the wake of Brexit to support the economy by bringing forward an additional £100 million of capital expenditure. The Scottish Government’s proposed reforms to council tax will generate £500 million over the parliamentary session, whereas the plans for council tax reform that the Tories produced in the run-up to the Scottish election in May would have reduced tax revenues and affected the ability of councils to deliver vital public services.

The Tories’ staggering hypocrisy is at the heart of the arguments that Ruth Davidson’s party is making. The Tories continually seek to criticise the Scottish Government while turning a blind eye to what their party colleagues are doing south of the border and failing to get their own house in order.

16:12  

When I heard that Derek Mackay had left his change at the parliamentary coffee counter when purchasing his morning pick-me-up, it occurred to me that that might be how he approaches his responsibility for the public finances. Perhaps he starts off his day by entering his ministerial office and realising that he has lost £14 million in common agricultural policy payments through a hole in his pocket. Maybe he goes through his day, leaves St Andrew’s house, heads home, gets back, sits down, puts on the telly—maybe it’s “The X Factor”—and suddenly realises that he has lost £290 million in land and buildings transaction tax. “Don’t worry,” the cabinet secretary thinks to himself, “with these fantastic new powers in the Parliament, I can always just stick up taxes on hard-working Scots and levy more taxes on north-east businesses.”

I almost find it amusing that the cabinet secretary appears to have little respect for sound finances. It was even slightly humorous when, in committee, he did not seem to understand fundamental economic concepts such as the Laffer curve, which is a key economic principle that shows that, as tax rates go up, revenue goes down, but now that we can see the SNP’s tax proposals, I can assure members that no one is “laffing” now.

It is becoming increasingly apparent that the SNP Government intends to ignore the vast majority of expert economic advice, including that of its own growth commission, by going ahead with an increase in the top rate of income tax. That will force higher-rate taxpayers to pay up to £800 more per year by 2020. The cabinet secretary’s budget will make Scotland the highest-taxed part of the UK, which is fundamentally unfair on hard-working, skilled workers in Scotland.

In the north-east, we have huge issues finding skilled workers to fill our teacher vacancies and plug shortages in the NHS, and in attracting the skills and expertise from across the world to continue the renaissance in our oil and gas industry. The SNP’s plans to hit skilled workers will make life harder for our local authorities, our wider public services and our businesses. When it comes to the north-east of Scotland, whether we are talking about business taxes, council taxes or income taxes, the SNP is all about take, take, take and always giving very little in return.

Will the member take an intervention?

No, thank you. I will not.

This year alone, north-east businesses have been hit hard by a council tax grab of over £7 million by the SNP. Despite that, the north-east will still contribute £18.3 million net by 2021. To rub salt into the wounds, the millions raised through that major tax grab from the north-east will be spent, almost exclusively, in the central belt. There will be very little benefit for thousands of households in the north-east, who will have whacked-up higher tax bills. That is absolutely outrageous.

The SNP’s tax proposals will not kick-start Scotland’s sluggish economy, nor will they—

Will Mr Thomson do what no other Conservative member has been able to do so far, and tell us what the Conservatives’ proposals in the budget tomorrow could be and what public expenditure they would cut to pay for tax cuts in Scotland? [Interruption.]

The cabinet secretary should listen to my colleagues, and I am sure that, tomorrow, Murdo Fraser will be able to tell Mr Mackay exactly what a financially prudent budget is all about—one that will create growth and jobs and that will be good for Scotland. We will hear Mr Fraser tomorrow.

The SNP’s tax proposals will not attract more high earners or top-rate taxpayers to Scotland. Increasing the top rate of income tax will serve only as a disincentive for the best and brightest to come to Scotland. Higher taxes will diminish our overall tax base and put additional strain on our public services; higher taxes will cause a drain of talent to other parts of the UK; and higher taxes will siphon creative talent from our own vital industries.

A report from the chartered accountancy firm, Johnston Carmichael, to the Finance Committee found that Scottish companies will have to offer tax equalisation packages to attract and retain the talent that they need in order to thrive. It is clear that if the SNP’s tax regime penalises businesses and skilled labour, companies will simply relocate to other parts of the UK.

It is important that Scotland is financially attractive for skilled workers and potential investors. The SNP’s tax policy will attract neither. It is clear that, on the issue of taxation, as on all issues affecting Scotland today, the SNP Government has shown itself, time and time again, to be politically out of touch and economically out of its depth.

By increasing taxes, the SNP will effectively erect a sign at the Scottish border saying, “Closed for business.” It would be the worst possible thing for this country, for our people and for our businesses. It would send out exactly the wrong message to the rest of the UK, and the world: the message that Scotland taxes skill, hard work and innovation. I therefore urge members to support the amendment in the name of Murdo Fraser.

I call Richard Lyle, the last speaker in the open debate, and then we will move to closing speeches.

16:18  

I begin my remarks by reflecting on the motion before the chamber this afternoon. The motion says:

“That the Parliament believes that families and businesses in Scotland should not be taxed more than those elsewhere in the UK.”

As in any debate in the chamber, for me the focus should not be on those in this place but those outwith it. That is, it should be on the people of Scotland—or, as the only accurate part of today’s motion says, Scottish families and businesses.

It is on the people of Scotland that I want to concentrate first of all. The irony will not be lost on anyone on the SNP benches that we have heard from the Tories about how they wish to stand up for Scottish families and businesses. Those are the same Tories who, unlike this SNP Scottish Government, looked to cut, rather than protect, public services—all done through their colleague and friend, the UK Government’s chancellor.

We watch a Tory Government, for which Scotland did not vote, impose a decade of real-terms reductions on Scottish budgets. That is simply a fact. The UK Tory Government’s cuts do not deliver for Scottish families and businesses. It is important to linger for just a moment longer on my point that this is a Tory Government for which Scotland did not vote, because that is ultimately what today’s motion serves to address.

In May, which was just a few months ago, the people of Scotland returned the SNP Government for an historic third term in office. SNP members believe in developing tax policy that delivers for the people of Scotland and for a sustainable economy. Unlike the Conservatives, we have a mandate that we will discharge as we continue to deliver for Scottish families and businesses.

It is a bit rich to hear from Conservative members today. Since 2010, the only income tax rate that the Conservatives have cut is the additional rate, from 50p to 45p. That gives a clear insight into their priorities. Indeed, the Resolution Foundation has estimated that policies that have been announced since the 2015 election of a Conservative Government mean that, by 2020-21, the poorest 10 per cent of households will lose around £400 a year on average, whereas those in the richest 10 per cent of households will gain around £200 a year.

One thing that is certain is that the SNP does not need to take any lessons from the Tories on taxes. The Tory tax and benefit changes are hurting the most vulnerable more than the rich. They are hurting Scottish families and businesses.

On the other side of the coin, the Scottish Government is taking positive actions to deliver for Scotland’s people. Our income tax proposals for 2017-18 and beyond will protect lower-income taxpayers, but they will also generate extra revenue of around £1.2 billion by 2021-22 to invest in key public services. We are protecting low-income taxpayers by committing to not increasing the basic rate of income tax and to ensuring that the personal allowance will reach £12,750 by 2021-22. That means that, given their current levels of income, 99 per cent of adults will pay no more tax than they did in 2016-17. Our plans have protected low-income and middle-income taxpayers, but in every year of the rest of the parliamentary session, we will generate extra revenue, which we will invest in key public services, by asking higher-rate taxpayers to forego a tax cut.

It is, of course, important to recognise that tax is only one side of the balance sheet and that those on higher incomes are being asked to pay a little bit more. Those people benefit from free higher education, free personal care, free prescriptions and other vital public services in Scotland. I believe that the people of Scotland will agree that those who are able to afford to pay a little bit more to help to build the type of society that we want and to protect our vital public services will be happy with the Government’s plans.

In my remaining time, I will reflect on business in Scotland and the Government’s record in delivering for business. The Government introduced the small business bonus because it recognised the extreme importance of small businesses as a core component of creating the sustainable and growing economy that Scotland wants. We continue to want that scheme to evolve. I am sure that that is why the Government has committed to expanding it from 2017 to lift 100,000 properties out of rates altogether. It has been estimated that the small business bonus scheme will benefit 102,394—or two in every five—properties in 2016-17 and that it will remove rates altogether for around 80,000 properties. When we listen to the Tories, it is important that we note that our scheme is significantly more generous than the current equivalent relief in England.

We have taken action to support business through our rates relief, our proposals on APD—a priority that is even more pressing as a result of the EU referendum—and, of course, our small business bonus. We are committed to a fair system of taxation. It is clear to SNP members that the SNP Government has a vision for Scotland and a real commitment to protecting Scottish families and, indeed, Scottish business.

I want to say something before we move to the closing speeches. Three members who have taken part in the debate are not present in the chamber. They are John Mason, Ivan McKee and Dean Lockhart, who is, I understand, closing for the Conservatives. I expect reasons to be given for their not being present, as that is a discourtesy to members and the Presiding Officer.

16:24  

One of the benefits of the new ruling by the Presiding Officers that we are allowed to tweet in the chamber is we are able to read some of the tweets that others are posting about us. Following my opening speech, Christina McKelvie, who is actually not here this afternoon, recommended that Murdo Fraser and I do a duet of The Carpenters’ “Close to You”. She must not have listened to the speech that I made, as I clearly set out the differences between me and Murdo Fraser and my desire for him to stand up for his own competence and abilities and endorse the powers of this Parliament, rather than simply handing them over to the chancellor in Westminster.

Liam Kerr made an interesting initial contribution. He criticised the SNP for being ideologically driven, which is quite ironic in the circumstances, as Dean Lockhart later set out that today’s Conservative motion is not about just matching Westminster but about going even further—about cutting taxes below what we are proposing to do in the Scottish Parliament. “Ideologically driven” seems to be in the nature of today’s Conservative Party—its members cannot make that claim about other parties. I think that they should be a bit more careful before they bandy those insults about.

I thought that John Mason made a useful contribution. [Laughter.] I know—it is difficult to believe, but he did. He spoke about balancing the need to tax and the need to spend. He put greater emphasis on the spending side and on that being the first priority, but he balanced that by saying that we need to be mindful of the impact in terms of behaviour, taxation and other effects.

I think that it is a balance. It is not just about cutting tax and it is not just about increasing spending on public services. We need to judge the mood, the right time, the need for public services and the load that the taxpayer can take. That is the approach that we have taken.

I thought that Murdo Fraser very cruelly criticised me, despite the fact that I praised him, by saying that we were previously in favour of tax cuts, back in Tavish Scott’s reign. That is true: in those happy days when Tavish was in charge, that was the judgment at the time, and it was the right judgment at the time. We have subsequently made the judgment that, at this time, we should increase taxes modestly to invest in education, because the need is so great.

Will the member take an intervention?

Not just now.

The investment is required now because the Scottish education has gone from being one of the best systems in the world to being just average. Now that we have the powers in our hands, we should seize the moment and make that decision.

When we were in power with the Conservatives at Westminster, we cut taxes for those on low and middle incomes, so we are not ideological about the issue: we make the judgment that fits the time and the economy.

Will the member take an intervention?

Not just now.

Making sure that we make the right judgment is, I think, the underlying principle today. It is not about cutting taxes no matter what the consequences; it is about making the judgment that is right for the country. [Interruption.] Adam Tomkins, who has just been heckling me from a sedentary position, but not particularly effectively—

Will the member take an intervention?

Not just now. I am about to make a point.

Adam Tomkins had the cheek to lecture everybody else about businesses moving abroad. That is from a member of a party that is now advocating a hard Brexit for this country, which will drive more businesses out of the country than any other single act that anybody can take. His fears about income tax are nothing in comparison with that.

Will the member take an intervention?

Okay, then—go on.

Persistence has paid off.

Mr Rennie has outlined a variety of positions that he has favoured, historically and currently. Which would be his favoured position, given free reign?

I thank Mr Scott for the opportunity to state my favoured position for now. In case he has not been paying attention, let me say that we are in favour of a modest penny on income tax, to pay for a transformational investment in education, so that we can drive Scottish education back up to its position as the best in the world. If the Conservatives do not want Scottish education to be the best in the world again, that is up to them, but I think that we should make the decision to invest in Scottish education, using the tax powers that we have.

Kate Forbes made an excellent speech, because she picked up on exactly that point. It is about looking at both sides of the balance sheet—what we tax and what we spend—and making the right, balanced choice for the future of the country.

I suspect that tomorrow we might disagree with parts of the budget. However, we will overwhelmingly agree that we should not be making tax cuts, whatever the consequences and the impact on public services. That is the road to ruin.

16:30  

I thank Murdo Fraser for bringing this interesting debate to the Parliament. I see that the Conservatives are out in full force, including Mr Ross, who is in the top row. It is good to see him in his seat.

Like Willie Rennie, I like Mr Fraser, but I do not like his motion. I think that it is misplaced. One might equally ask why people in Scotland do not pay more tax than people in Canada, Estonia, Japan, Mali or—to take a local example—Perth, in Mr Fraser’s constituency.

I think that I have related this tale in the Parliament before, although I did not give details about the politician concerned: during the work of the commission on local tax reform, a Conservative councillor told me that at the next local election she wanted to go to the electorate with an offer of what the Conservatives would do in her council area, how they would pay for it and how they would raise the money. That is basically what most politicians want to do at all elections, at local and at national level, and it means having discretion and freedom over things such as tax. It is a choice. If people in Perth, in Mr Fraser’s constituency, want to pay a little more tax to pay for a new swimming pool, that should be their choice. It is not a hard-and-fast rule that everyone in a whole country such as Scotland should always—or never—pay more than their neighbours.

Research has shown that countries in which taxes are higher as a share of gross domestic product are wealthier. Such countries are better off and more productive, and they have high levels of investment and low levels of inequality.

Alison Harris mentioned Nicola Sturgeon’s visit to Ireland. I think that the last major politician to visit Ireland before Nicola Sturgeon might have been the previous chancellor, George Osborne. When he went to Dublin, in 2006, he said:

“Ireland stands as a shining example of the art of the possible in long-term economic policy making”.

Look how that turned out.

Liam Kerr made an interesting speech. He quoted Einstein’s comment about income tax being the hardest thing in the world to understand. I think that if Einstein had listened to Mr Kerr’s speech he might have thought that the most difficult thing to understand was Mr Kerr’s argument. Einstein also said:

“The difference between genius and stupidity is that genius has its limits.”

With new powers, this Parliament has the opportunity to think differently. This debate is about not simply tax rates but how we design the tax system. Tax design is vital, and there is a lot of history in that regard. Mr Wheelhouse talked about Adam Smith’s four maxims of taxation, the fourth being that people should pay tax in proportion to their ability to pay. As the finance secretary said in response to Richard Leonard, that principle is often thought of in relation to income. The problem is, of course, that Adam Smith wrote “The Wealth of Nations” in 1776, and income tax was not introduced to the UK until 1799, when it was introduced by Pitt the younger, who needed revenues for the Napoleonic wars. Smith was not referring to income. He went on to make it clear that by “proportionate” he meant that people would contribute

“in proportion to the revenue which they respectively enjoy under the protection of the state.”

In other words, Adam Smith was talking about land rents. Yet if we think about land rents today in the context of domestic property, we find that council tax is the most regressive tax in the UK. The poorest 10 per cent—the lowest-income families—pay between 6 and 8 per cent of their income in council tax, and the top 10 per cent pay a mere 2 to 3 per cent of their income. As the Green amendment suggests, we want there to be a

“tax shift from income to wealth”.

There is a very good example of where the Tories are hypocritical in all of this. In Dunfermline—I note that Willie Rennie is not paying attention—

I am.

Indeed.

Amazon has a distribution warehouse in Dunfermline, and it has another dozen or so across the United Kingdom. The non-domestic rateable value of the Dunfermline premises is £3.776 million, which generates about £1.8 million a year in rates for Fife Council. Across the UK, Amazon’s premises generate more in rates than the value of the entire corporation tax that is paid by the company, yet the Tories want to cut corporation tax. That demonstrates the importance of having a tax shift from income and profits to wealth and land.

The recent Mirrlees review produced a very good document on tax redesign, which I commend to members. It talked about scrapping the land and buildings transaction tax, a move that the Greens support, and, indeed, scrapping council tax. More recently, Naomi Eisenstadt recommended that we scrap council tax and focus on the tax that is paid by the lowest 40 per cent of earners.

We have stressed the importance of raising tax at the top rate, and we share Labour’s aspiration to do that, although we might differ on the rate itself. We took that position from the point of view not so much of raising revenue but of tackling inequality, because curbing excessive pay demands is a vital ingredient in curbing and reducing inequality. Indeed, in the proposals that the Greens put to the electorate—I commend them to members—we quoted the impact that that would have on the Gini coefficient.

Finally, I want to stress that tax is not just about income. The statistics published by the Office for National Statistics on the total direct and indirect taxes that are paid showed that, in 2015, the bottom 20 per cent of earners paid 40.7 per cent of their total income in tax and that the top 20 per cent paid just 37.8 per cent of their total income in tax. That is because indirect taxes are extremely regressive.

You must stop there, Mr Wightman. You are cutting into other people’s time.

I commend our amendment to the chamber.

16:37  

It gives me pleasure to speak in favour of the Labour amendment. I thank the Conservatives for securing the debate, because it has allowed us to have a substantive debate on the budget priorities ahead of Mr Mackay’s announcement tomorrow—as Patrick Harvie pointed out, that is something that we have otherwise been denied because of the curtailed nature of the budget scrutiny.

Three themes have run through this debate: the impact of the current and impending cuts on the Scottish budget; the taxation options that are open to us; and the ways in which we can generate economic growth.

We have seen the dire warnings from the Fraser of Allander institute about the potential for £700 million-worth of cuts between now and the end of the parliamentary session, and Unison has told us that it reckons that, in the course of this year, there have been 7,000 job losses in local councils, with cumulative cuts of £184 million. However, as Kezia Dugdale pointed out, the issue is not just about the numbers; it is also about the impact that the cuts will have on people’s lives. If you are in a community with a library that is under threat of closure, if you are in a school where the number of classroom assistants might be cut or if you are staying in a house that needs repair, you will be really worried about the budget settlement that Mr Mackay is going to announce and whether there is the potential for further cuts in local authority services.

However, you will not have heard anything about those practical examples from those on the Tory benches. If a word cloud was produced from the speeches of the Tory members today, the words that would come out would be “wealth” and “money”. That is what it is all about for the Tories. We did not hear anything about inequalities, about the fact that, in the economy currently, women are suffering more than men and there is a decline in job numbers for women, or about the issues that many of us are hearing about in our constituencies and regions.

I will give way to Mr Mason.

Is James Kelly suggesting that we could cover all the Tory tax cuts since 2010 with tax increases this year?

I certainly suggest that SNP members could go forward by supporting the Labour amendment tonight and increasing the top rate to 50p. Not only would that give a strong signal that you support progressive taxation; it would give some assistance to the people who are suffering in communities throughout Scotland.

Will the member take an intervention on that point?

No, not at this time.

Paul Wheelhouse spoke about protecting public services. We might consider the impact of the SNP record on education: an 8 per cent cut in funding per pupil and 3,500 fewer teachers than we had in 2007. Look at the outcome from yesterday’s statistics: nearly a quarter of young kids leaving primary schools are unable to read, write or count to the required standard. That is a scandal. It is a consequence of the cumulative cuts of the SNP Government.

On educational funding in South Lanarkshire, the area where Mr Kelly is based, will he comment on why the Labour-controlled South Lanarkshire Council says that the financial settlement will be good enough to allow it to freeze council tax next year?

The best thing that MSPs like you and your colleagues could do to support South Lanarkshire Council would be to support a funding settlement to deal with the cumulative effect of the millions of pounds of cuts that that council has had to deal with.

rose—

No, thank you, Mr Doris. You have had your say.

Please sit down, Mr Doris.

On taxation, Labour supports a top rate of 50p to protect public services and to expand the tax base. Jackie Baillie ridiculed the Tories for wanting to abolish APD. The fact is that a third of Scottish families cannot even afford to get a holiday, yet the Tories want to abolish APD and the SNP wants to cut it. Some families cannot get a trip to the seaside, and the Tories, supported by the SNP, are more interested in supporting families on their way to the duty free shops.

Murdo Fraser argued against higher taxation, referring to the impact that that would have on growth. We know that, if you stay in poor housing, your chances of educational advancement are undermined. Surely if we invest in public services, we have better-quality houses and we give people the chance to advance in education and then we address skills gaps and promote the economy, that must be one of the advantages of progressive taxation. Support the Labour amendment at 5 o’clock.

I remind members not to use the term “you” in the chamber, because the official report does not know who you are speaking about.

16:43  

I have found this a very helpful debate in advance of the budget that I will set out tomorrow. It has been helpful on tax policy. It is our position that tax policy should be developed in a responsible manner. Mr Wheelhouse, the Minister for Business, Innovation and Energy, covered the key principles around certainty, convenience, efficiency and proportionality to the ability to pay. In addition, the Government has taken a collaborative approach to tax policy, and we have outlined a tough approach to tackling tax avoidance.

We aspire to protect low and middle-income taxpayers. Given the choice between raising revenues and handing out large tax cuts to the richest in Scotland, we choose public services. Taxes are part of the social contract, and it is through raising revenue that we can provide a quality NHS, free education, delivery of the living wage, free prescriptions and free personal care. Those choices are right for Scotland, but they are now under threat from the Conservatives.

Murdo Fraser rose—

Would the Conservatives like to make a suggestion? Which of those policy choices for the people of Scotland do they believe should be abandoned?

Given that the cabinet secretary has had time to do some reading, does he now understand the Laffer curve?

I just asked a very serious question about the public services that are provided for the people of Scotland, and in return I get a childish remark from the Conservative Party’s finance spokesperson.

I asked a sensible question.

I have here a more informed remark from Murdo Fraser on exactly which of the commitments that I have just outlined the Tories want to abandon. The Tories say that those policy commitments—concessionary travel, the council tax freeze, free prescriptions and free tuition—are choices the Scottish Government is making and they are increasingly looking like the wrong choices. It seems from the shock on the faces of Murdo Fraser’s colleagues that they do not know that the Tories have abandoned some of those policy choices.

I have to agree with other members of the Opposition that this debate has moved away from tax and focused on an even bigger ideological topic: devolution itself. The Tories have shown their true colours today not on tax but on devolution. That is what we have learned from the debate. They have reverted to type—do as Westminster does. The only tax rate that has changed under the Conservatives is the top rate of tax for the richest in the United Kingdom, which has been reduced—a decision that was totally wrong when it comes to funding our public services.

When we look at what the Conservatives have done on the thresholds for inheritance tax, it is clear that the UK Conservatives care more for the dead rich of this country than the living poor. It is a travesty for those people that this UK Government—

Will the cabinet secretary give way?

No, I want to finish my point.

The Tory tendency is to centralise to Westminster, which has said—[Interruption.] Oh, I think that I have hit a raw nerve. Yes, we know what the Tories’ day job is—it is to do as their London bosses tell them.

If the Conservatives’ position is simply to undercut taxes in Scotland, there is a duty on them to tell us what spending commitments they propose to undo.

Will the cabinet secretary give way?

The Conservatives have totally failed—they make spending commitment after spending commitment, but it is not feasible to reduce taxes while demanding more public expenditure.

Will the cabinet secretary give way?

Please sit down, Mr Harvie—the cabinet secretary is not taking an intervention.

We are investing more in schools and hospitals while the Tories focus on refurbishing palaces and on nuclear weapons.

Devolution is about the ability to do things differently, and we want to chart a different course—one that is fairer and more progressive—while the Tories propose tax cuts for the richest and for big business. The Scottish Tories are no different, not even on the single market. We have heard from Brexit deniers, but we are now hearing from Brexit gymnasts, given the Tories’ somersaults on the single market. People want to live, work and invest in Scotland, despite the Tories talking Scotland down.

I will give members some of the positives about Scotland’s economy. Scotland’s GDP per head is now 2.1 per cent above its pre-recession peak, whereas the figure for the UK is only 1.2 per cent above its pre-recession level. Even excluding North Sea oil and gas, Scotland’s output per head is higher than the UK average excluding London. Productivity in Scotland—its output per hour—has grown by 4.4 per cent since 2007 in comparison with no growth in the UK. Since 1999—the period of devolution—real full-time weekly pay in Scotland has risen by 17 per cent in comparison with 12 per cent in the UK. Investment in research and development is up in Scotland too.

That is a strong economic message—it is part of the package with which we can promote Scotland while the Tories talk down our country and undermine our economic message. We should use our powers for a purpose, rather than pulling every economic lever just to see what happens. We will take a balanced and progressive approach that is based on fairness and is pro-enterprise, pro-entrepreneur and pro-growth but which also tackles inequality.

We can chart a different course. The Tories have reverted to type—London controlled, making tax cuts for the rich, abandoning universal services and talking Scotland down. If divergence on tax is coming, it is coming because we want a different way in Scotland, and I will be proud to propose that budget tomorrow.

16:50  

We called for this debate on taxation because tomorrow’s budget will set the future direction of tax and fiscal policy in Scotland. Let me remind members who today call us devolution deniers that those powers were delivered to this Parliament by a Conservative Government. Under the new tax and fiscal powers that are coming to the Parliament, levels of public spending will, for the first time, depend in large part on the performance of Scotland’s economy relative to that of the rest of the UK. That new fiscal landscape has far-reaching implications for policy.

There is cross-party consensus that we need to increase levels of public spending and improve public services in vital areas. To do that, the policy that is being taken by the SNP and other parties is to increase tax. They have all made it clear today that they want Scotland to be the highest-taxed part of the UK. We take a different approach. We think that families and businesses in Scotland should not be taxed at a higher rate than those elsewhere in the UK. Our policy approach is to increase levels of public spending and to improve public services by expanding the economy and expanding the tax base in Scotland. Let me make it simple. A faster-expanding economy will allow the Government to spend more.

During the debate, my colleagues have made two things very clear. First, stronger economic growth should be an absolute priority for the Government. Any steps to increase tax in Scotland would damage future growth. Secondly, higher levels of tax would shrink the tax base in Scotland. For those who are not convinced by the principles of the Laffer curve, as clearly explained by my colleague Murdo Fraser, I draw members’ attention to what President John F Kennedy called the “paradoxical truth”, when he said that

“the soundest way to raise the revenues in the long run is to cut the rates now.”

We agree with that.

Let me first address the fundamental priority of economic growth. The Fraser of Allander institute report that was published yesterday highlights the need for Scotland to close the growth gap with the rest of the UK, in order to avoid further reductions in public spending. That report reflects the concerns that we have raised many times in the chamber about the underperformance of the Scottish economy. That underperformance, as highlighted by Jackie Baillie, will now have a real impact on the level of public spending in Scotland. If we look at the Scottish Government’s own principal economic targets—the four i’s—and compare our performance relative to that of the rest of the UK, we can see that inclusive growth is down, innovation and productivity are down, internationalisation and exports are down, and Scotland’s share of inward investment and jobs is down.

Let me make it clear to Mr Mackay that that economic underperformance was happening long before Brexit. In fact, in eight of the 10 years in which the SNP has been in government, the economy in Scotland has underperformed that of the rest of the UK, and that is set to continue. Growth in Scotland for 2017 is forecast to be less than half of UK growth.

The Fraser of Allander report also highlights a number of structural problems facing the economy in Scotland—low growth, low productivity and declining exports, with only 50 companies in Scotland accounting for 50 per cent of our exports. It also notes that we have the lowest employment growth rates in the UK and the highest rates of economic inactivity. Given that economic background, making Scotland the highest-taxed part of the UK is precisely the wrong policy response.

The member returns to the central argument that we have heard from many Conservative speakers during the debate, which is that higher taxes in Scotland are just wrong in principle. Even if I believed everything else that the Conservative Party has been advocating, I cannot see how, if it is wrong to take more income tax from wealthy people, it can possibly be right for the UK Government to be taking more income away from poorer people. The two things simply cannot add up.

Those are independent points. We are saying that, if people are taxed too highly, they will leave the country. That is what the Royal Society of Edinburgh has said—it has said that there is a danger that, if the higher tax rate in Scotland is set too high, we will lose more tax than we gain. To increase Government tax revenues and spending in Scotland, we need to expand our business base, attract entrepreneurial individuals, increase our exports, help existing businesses to expand and attract business from the rest of the UK. Making Scotland the highest-taxed part of the UK is not the answer.

We also need to use tax policy to expand the tax base in Scotland, encourage increased participation in the economy and stimulate business activity. I see that Mr Swinney has joined us. When he was finance secretary, he recognised the need to use tax policy to stimulate business when, in 2012, he acknowledged that business rates play a part in attracting and retaining businesses and when he committed to setting the poundage rate no higher than that set in England.

Unfortunately, things have changed. For example, the large business supplement now makes the poundage rate in Scotland double that in England. In addition, under the SNP Government, business rates have gone up, land and buildings transaction tax is up, the effective tax on empty business properties is up, the effective rate of income tax for higher earners is going up, sporting rates are up and council tax is up and is being taken away from the local authorities.

It is not just the SNP that wants to make Scotland the highest-taxed part of the UK. As we have heard today, all the other parties in the Parliament want to increase the tax burden in Scotland for high-income individuals. However well intended those policies of higher taxation might be, there is compelling evidence to show that they are ultimately doomed in their objective of increasing the levels of Government income available for public spending.

I mentioned the Royal Society of Edinburgh. It has given advice that, in setting tax policy, the Scottish Government should exercise a high level of caution so that it does not shrink its tax base.

The member has proclaimed several times that he wants to cut tax. Can he explain why the chancellor has increased national insurance contributions for those on £45,000 or more by up to £200 if he is so much in favour of cutting tax?

If we look at the totality of the Government’s fiscal policy, we find that the direction of travel is to reduce taxes overall.

When Mr Mackay meets with the head of the SNP growth commission, Andrew Wilson, he will perhaps want to discuss Mr Wilson’s approach to how to increase revenue from taxpayers in Scotland. Mr Wilson’s policy is that it is better to expand the tax base than to increase tax rates, which we agree with.

I will conclude by considering the position of individuals and businesses that are looking to set up in a higher-taxed Scotland. Businesses need to factor in the additional costs of higher tax through the large business supplement and higher tax on empty properties. When businesses are looking for skilled employees, they will have to pay a supplement to top up people’s wages so that they get the same take-home pay as those in the rest of the UK. Business owners and employees will have to pay higher rates of tax for residential purchases and businesses will have to pay higher amounts on commercial premises with a rateable value above £35,000. Given all that, it is no surprise that the economy in Scotland is lagging behind that in the rest of the UK.

With tomorrow’s budget, Mr Mackay has the opportunity to make amends and to reverse the direction of travel of SNP policy. He can make Scotland more competitive and ensure that families and businesses in Scotland are not taxed more than those elsewhere in the UK. Mr Mackay asked for some ideas for his budget tomorrow. I suggest that, as a start, perhaps his Government could stop wasting close to £1 billion on cost overruns and the incompetent management of projects.

Dean Lockhart has just made a pretty feeble attempt to explain how the Tories would cut taxes. Is he not aware that spending commitments of the past cannot pay for tax cuts in the future? Does he not even understand basic arithmetic?

Mr Mackay often refers to the manifesto on which the SNP was elected in May. It contains two things: a commitment to independence and a bunch of spending commitments that are based on the Barnett formula. Which does the SNP want: independence or the spending commitments that are underwritten by the Barnett formula?

I support the motion in Murdo Fraser’s name.

On a point of order, Presiding Officer. Can you advise whether the Cabinet Secretary for Economy, Jobs and Fair Work should correct the Official Report? In a parliamentary question, I asked him whether the building of the Aberdeen western peripheral route was delayed. On 22 September, he answered that there was no delay. On 24 November at the Public Audit and Post-legislative Scrutiny Committee, I asked the question of Transport Scotland and was again told that there was no delay.

Yesterday, it was revealed that Transport Scotland became aware of delays to the project on 9 November, which was two weeks before it directly told me otherwise. Do you agree that the cabinet secretary responsible for Transport Scotland should make a statement or appear before a committee to clarify when Transport Scotland knew of the delay, when the cabinet secretary knew of the delay and why a committee of this Parliament was not given the facts?

I thank Ross Thomson for advance notice of his point of order. I understand that he wishes to pursue the matter further. I note from his comments that the matter was raised and a reply was received at a meeting of a committee of the Parliament, rather than in the chamber, so I suggest that it is not a point of order for me in the chair and that he should raise it with the convener of the committee, who in turn should raise it with the cabinet secretary.