 Felly, wrth gael i gyd yn y gredigol F1-1222 y Ffinans i Gweithgrifennuedd Pwyllgor i Gweithgrifennuedd Pwyllgor yng Nghymru, Arfynigolau Ffraenwyr yw 2021. Felly, rydw i'r wych i gyd yn ymddangos fel Tom Arthur, Ffinans i Gwyrfaenwyr, Gweithgrifennuedd i Gwyrfaenwyr, Ffranigwyrgwyllfa, ac Mr Arthur i gyd yn ymddangos i gyd i gynhyrch yn fwyntiau I welcome you both to the meeting and invite Mr Attleton to make a short opening statement. Thank you, convener, and good morning. Let me begin by extending my thanks to the committee for inviting me to today's session to give evidence on Scotland's first framework for tax. I understand that the committee is keen to learn more about the framework's purpose and content, and I'm very happy to discuss that today. The framework for tax builds on the Scottish approach to tax session, which was the subject of inquiry by the Finance and Constitution Committee during the previous session. It seeks to capture the key components of good tax policy making and to reflect the principles and processes that underpin our approach to tax, as well as our programme of work. In short, what is our identity in relation to tax policy and what are we trying to do and why? As the committee will be aware, the Scottish approach to tax session is based on Adam Smith's well-recognised principles for a good tax system, proportionality, certainty, convenience and efficiency. We added two additional principles to demonstrate our commitment to engaging and collaborating with stakeholders on tax policy and to underline the firm approach that we take to tackling tax avoidance activity. Those principles remain a core part of the framework, although we have strengthened the final principle to capture effective tax policy making. That includes the firm approach to tax avoidance and our resolve when that remains the same, but it recognises the importance of effective policy design and delivery as the first step to reducing the scope for avoidance practises. In developing the framework, we wanted to build on those principles by setting out, as clearly and as excessively as possible, a fuller explanation of how we make tax policy in Scotland and sequence it around the Scottish budget process. In doing so, we expect to realise a number of benefits. First, to demonstrate our commitment to openness and transparency, a key ingredient of any good tax system. Secondly, to lay the foundation for a process of continuous improvement using feedback from stakeholders and policy evaluation to ensure best practice in how we design and deliver tax policy. Thirdly, to support our efforts to align the tax policy cycle as far as possible with the Scottish budget and UK fiscal events, which are of critical importance to the development of devolved and local tax policy. Fourthly, to be upfront about our priorities and programme of work for the course of this Parliament. Events and circumstances can change rapidly and that can change the context within which we take tax policy decisions. Covid-19 is a profound example of that. However, setting out our intentions for taxpayers and businesses is important, particularly in times of volatility, which is what we have done. Finally, to demonstrate our desire for a more open, mature and informed debate about tax policy in Scotland, something that I know that this committee is committed to. The framework is intended for a range of audiences. Our ambition was to make it as accessible and as easy to understand as possible. It is written concisely that jargon is minimised or explained—not an easy task in this area—and it sets out the extent of our powers and how the revenue that we raise contributes to funding the Scottish budget. Communicating clearly on tax and engaging the public on tax policy is a priority for the Scottish Government. However, improving public understanding of tax cannot be achieved by Government alone. I am keen to work with the committee and all our interested stakeholders on initiatives that can help to achieve that. In that spirit, I want to take this opportunity to thank all those who contributed to the framework's production. We sought engagement with a wide range of stakeholders, including tax professionals, business representatives, third sector organisations and the general public. We also carried out a two-month consultation process during September and October last year. The feedback that we received was incredibly valuable and constructive. I made a positive contribution to the final version of the framework that was published on 16 December last year, which was warmly welcomed by stakeholders. I genuinely believe that we have a product that has been co-produced and I am extremely grateful to all those who contributed for their expertise and advice. I will end by looking to the future. I hope that it is clear that the framework acts as a foundation for tax policy in Scotland. There are aspects such as the programme of work chapter that will need refreshing to reflect changes to our work. We plan to revise that chapter around the Parliament's midpoint. However, our intention is that the framework as a whole will stand the test of time and can be built upon further. That acknowledges that one document can never be a silver bullet for every issue or challenge that we face. What the framework does is demonstrate our commitment to good guardianship in relation to our devolved and local tax powers. That must be a sustained commitment to continuous improvement, which is why, for example, we published an evaluation of the changes made to income tax in 2018-19 alongside the framework. It is also why we will work with the Parliament to reconvene the devolved taxis legislation working group, allowing more detailed consideration of how we can improve the way that we consult on and make legislation on devolved taxis. However, coming back to what I said at the outset, the framework provides a foundation for the design and delivery of tax policy in Scotland. Policy is that support with recovery, national outcomes and a pursuit of a fairer, greener and more prosperous Scotland for everyone. In that, I will conclude and look forward to the discussion that we will answer. Okay, well thank you very much for that. That was a very interesting statement, certainly a lot of questions, I believe will emerge from it. I just want to begin with the two new principles, if I may minister. The first one you said was engagement to promote public understanding and you talked about how it is important to communicate clearly and engage the public in your statement. What form is that engagement and communication taking? Well, in the first instance is how this document itself, which is described as a foundational document, was created. There was extensive consultation, so for example there was a process of pre-consultation with Revenue Scotland and other parties. We had the public consultation over September and October and then following that we had further engagement with stakeholders, including Revenue Scotland, to refine the proposals that were contained within the framework. The framework reflects that extensive engagement. To give perhaps one or two specific examples of our process to engagement, if we look at one of the commitments in the work programme around the additional dwelling supplement review, that is work that is underway at the moment. We have undertaken a public consultation, which closed earlier this month. We have also undertaken significant engagement with stakeholders, both at the official and ministerial level. I have chaired a round table at the start of this month. We will respond fully to that process during the summer. That is one area. Another area in the work programme that reflects the joint agreement between the Scottish Government and the Scottish Green Party is around council tax, which is the establishment of a working group to look at deliberative processes culminating in a citizen's assembly to look at resourcing of local government, including council tax. To give an example of engagement of the widest possible kind, a citizen's assembly will look at resourcing of local government, including council tax. I hope that that demonstrates that there is a wide array of ways in which we are taking forward our commitment to transparency and engagement with the people of Scotland on how we design tax policy. It is not really public engagement, but it is stakeholders and people like that. How many will be at the citizen's assembly? 100 folk? As you just said, there is engagement with stakeholders, but also public consultation. There is a public consultation in this document. There is a public consultation with regard to the additional dwelling supplement. We have that balanced approach. We have that detailed engagement with stakeholders, but there is also that opportunity for wider public consultation and discussion. Of course, there is continuous engagement with Parliament as well. Prior to the devolution of income tax, etc., in the run-up to 2017, there was a lot of discussion about tax avoidance and about how Scotland would develop differently from the United Kingdom Parliament in terms of how it would address that. I wonder how that has evolved over the years. One of our new principles has said that a view to minimising tax avoidance has been the Scottish Government's method, if you want to put it that way, of minimising tax avoidance. How does that differ from the UK? I refer members to the decision-making matrix that is contained in the document. That lists six particular aspects of how we go around taking decisions on tax policy. We are not numbered, but the one at the bottom of the column speaks around delivery and administration. What that makes clear is the need for detailed and continuous engagement throughout the process of policy design. For example, with a fully devolved tax, such as LBTT or Scottish landfill tax, and for the other taxis that have still come online—aggregates levy and air passenger duty—or air departure tax, engagement comes with Revenue Scotland, which can provide that expertise at the outset. That can help to shape and inform how we go about developing legislation. Ultimately, where our role sits within that particular process is in the legislation that Parliament passes. We want legislation to reflect best practice and to be informed by the expertise of those who are responsible for operational matters and tax and who act independently, for example, given Revenue Scotland. That close engagement and work right from the outset in policy design through to implementation with the relevant tax authority. Similarly, should proposals emerge out of the work on local taxation and reforms, local authorities, as the tax administration with regard to local tax in this case, there would be that early engagement from the outset, so that we are considering the operational matters where the outset and its term can inform how we go about drafting legislation. My understanding was that the Scottish Government, in terms of tax avoidance, was going to take a principled approach as opposed to the UK's position whereby, unless something is specifically addressed in legislation, there is an opportunity for avoidance. Whereas, in the Scottish context, it was perceived that the intention was to avoid tax, even though it was not in tablets of stone. For example, it would still be able to collect the taxation. John was in the committee at the time, and that was deliberated over it. Are we not moving forward with that? I mean, because I understood that that was going to be what was going to be a significant difference between Scotland and the UK to minimise tax avoidance. That principle is still contained within it, and it is why we have expanded it beyond just referring to tax avoidance but looking at effectiveness, so we are looking at it in the round. We want effective pot tax policy, but it does what it says on the tin, and reducing and minimising opportunities for avoidance is a key part of that. However, to minimise avoidance, it needs that detailed input from those who administer and deliver the tax on the ground. That technical expertise is extremely valuable and of importance. In terms of what I set out with regard to the framework and the decision-making metrics in the need to be considering delivery and administration in the outset, that is the practical approach that is contained within the framework for tax that informs how we go about designing legislation that is effective and in being effective builds upon the existing principles that you refer to with regard to minimising opportunities for avoidance. I do not know if there is anything that you would want to add to that, Alex, in terms of how, in developing the framework, how consideration was given to building upon the avoidance principle. No, I think that that is right. I think that it is not waiting for avoidance activity to take place, but looking at the redesign tax policy so that you minimise those opportunities and give yourself every opportunity to have a robust policy that can be delivered and administered by the tax authority in a way that does not give those opportunities for tax avoidance. As the minister said, it is putting that up front rather than waiting for an avoidance practice to emerge and then reacting to it. That will probably happen at some point with any tax. There is always going to be those sorts of situations, and Government has to respond and tax authorities have to respond. However, the point about the framework is that good tax policy design starts from the very outset. If you engage the tax authority at that time and engage them in the process of policy design, the hope would be or the aspiration would be that you would avoid those situations in those practices or limit the scope for those avoidance practices to take place. Is that different from the UK? I think that it is difficult to answer that question. It is a very broad question. We are talking about a Scottish tax framework. I just want to see what is Scottish about, how does it differ from the UK. I understood that a principled approach was a significant difference, but I would have thought that any legislature anywhere would want to try and make sure that avoidance was minimised when it set a tax. Always what is a point in setting a tax? I can only speak to this framework and the Scottish Government's approach. Certainly, as the minister said, from the outset, we have been clear about anti-avoidance. In terms of this framework, we have broadened that out to acknowledge the fact that you need to take action early to make sure that a tax is well designed in order to limit the scope for tax avoidance. That is all that I can speak to in terms of the Scottish Government's position. Basically, one of the things that the framework talks about is to ensure that Scotland's public finances are ffiscally sustainable. Ffiscal sustainability is an issue that has certainly drawn the attention of the committee, because the Scottish Fiscal Commission pointed out, for example, that, by 2024-25, which will come round a lot sooner than we perhaps think, it is forecast to increase beyond the block grant adjustment by £764 million, and that was before the Scottish Government delivered a 6 per cent uplift in benefits. How are we going to ensure—how is this framework going to ensure—fiscal sustainability? With regard to how we use our tax powers, the framework sets out a range of principles that are applicable to the question, if you ask, but perhaps if I may be just picked one or two, having to look at policies in the around, I made reference to the decision-making matrix, and so that is having to look not just in terms of how we adhere to the principles and the objectives that are set out within the framework, but, more broadly, how our taxes interact with other taxes, devolved and local taxes and UK taxes, and how it interacts with the broader policy landscape in which we operate within, including social security. That is built into how we go around considering tax policy development, decision-making and implementation is to take that broader approach. Clearly, that has to be looked at on a case-by-case basis. You raised the issue of forecast expenditure on social security. Decisions on allocation of funding are taken as part of the budget process, and I am conscious that we are moving into the territory of spend. With regard to what we are doing around tax, it ultimately comes back to how to use the tax system to maximise return on revenues. We have just spoken about wanting to minimise avoidance for one, but a key principle, of course, is certainty. We seek to provide that certainty, which is much of benefit to business. Take, for example, around one of the only major business tax that we control, non-domestic rates. Our commitments are around the poundage, the small business bonus scheme and maintaining that for the length of the Parliament. Our commitment to, for example, business growth accelerator and fresh start relief, giving that long-term assurance to users of the tax system that there will be consistency in the policy landscape. That is an example of where the principle of certainty is applied to how we implement tax policy in Scotland and can help to achieve that aim of sustainable revenues. Clearly, that is a much broader question, because ultimately tax is about the collection of revenues. In terms of revenue generation, when we're going to sort of broader economic considerations. A productive and, in fact, an increasingly productive economy, and it has to be increasingly productive per capita because of the demographic challenge that we're actually facing. One of the things, evidence that we got, for example, from the Scottish Property Federation, but also others, is that the projections in terms of non-domestic rates are whole and realistic. More and more people are moving to online shopping, for example. I don't think that anyone really believes we'll return to the pre-Covid situation in terms of high street spending, yet the Scottish Government is predicting a 25 per cent increase in revenues over the next three or four years from that source. How is that being addressed? If the Scottish Government is to maintain budget levels roughly where they are even, we have real major issues in terms of the social security shortfall, and we're not going to generate the funds that the Scottish Government is predicting in terms of non-domestic rates, how is the tax system going to address that? I mean, you have said, for example, in your report, that, you know, the way steps taken to grow the tax base. What does that mean? Does it mean that additional taxes are more people going out to work in order to have more tax payers, which, frankly, is what most of us would like to see? I'm just wondering how you square those circles. It's a really excellent set of questions, convener, and I'm trying to think of a way I can answer them concisely in the space of, you know, 90 seconds or a couple of minutes. You can take as long as you like. I'll be happy to. Okay, let's maybe break it down. I've taken the broad issue around projectivity. We've just published a national strategy for economic transformation, so that speaks about a range of measures, you know, productivity skills at the heart of that. Issues around growing the working age population, we recognise that, but we operate within the constraints of the Scotland Act. We do not have control over the levers of migration, and that is a huge issue. It's been compounded by Brexit. Hold on a second. There's no reason why we can't attract migrants from other parts of the United Kingdom before growing and thriving economies. It's not all about bringing people from overseas. As I mentioned before, as committee, some constituencies in Edinburgh get 7,000 or 8,000 EU citizens living and working here. My constituencies get less than 300, not because there's any difference in migration between Ayrshire and Edinburgh, but because economy in Edinburgh is so much stronger. Migration in terms of people from other countries is important, but what about migration from within the UK of working-age people, not folk who come to Arran and Argyll to retire, for example, but to come and work in the tribute to the economy? It's a fair point, so I wasn't suggesting that migration is a silver bullet. It's part of a broader range of measures. The important thing is, we're going to look at inter-UK migration. We have to look at what is the employment level across the UK. Some of the challenges that we are facing around skills shortages in a tight labour market are not unique to Scotland. There are UK-wide challenges as well, so that creates challenges in that particular sphere. Reference was made to the high street and the changing nature of, I suppose, retail. Parliament would be aware of that. It's going to be the publication of a retail strategy shortly, so I can't pre-empt what's in that, but that is something that has grown out of a piece of work that was in collaboration with business, with academia, with trade unions, with the sector, with the public sector. There is the work that we are undertaking in partnership with COSLA for an updated town centre action plan. Again, that came out of an independent review that was conducted. So in terms of the policy interventions that government can take, be it on national strategy for economic transformation or retail strategy, town centre action plan, we'll look in longer term what we're seeking to do around MPF4 in the planning system. There's a range of policy levers that we can pull, but there's no one single lever that can address all of these particular issues in one fell swoop. I hope that it's captured the fact that there's a range of different initiatives going on, but ultimately there's limits to what we can do within the existing suite of powers that we have at our disposal. The main macroeconomic levers, employment law, are still reserved to Westminster, so we have to operate within those limitations. It's a much broader question that's going beyond the framework for tax, which, of course, we're specifically considering a small amount, but there is a broader range of work going on to help to ultimately increase productivity, to increase prosperity and, as such, to translate that into earnings and to increase tax take. I'm just going to mention a couple of wee things, because I want to let other people in. One is the issue of the North Sea. Obviously, we've got a lot of highly paid workers there, I think 71,000 at the last count, and they earn more than average, the Scottish average, so they pay a lot more in tax than the average. If we're switching to green jobs, what is the Scottish Government doing to look at how that will impact on the tax base? Secondly, just so I don't take up too much of your time, minister, and let others in, has the Scottish Government looked at the issue of behavioural change? Obviously, if we're short of taxes, Governments can be tempted just to put taxes up, but the impact of that is always, you know, you may increase taxes in the short term, but if it dissuades people from investing here or being living here, and therefore paying their taxes either in the rest of the UK or elsewhere, then you effectively lose, you know, you lose everything, so there's a half a loss better than no bread kind of analogy there. So those two things, North Sea oil, I know the Campbell announcement today is that perhaps there'll be a, because of rocketing fuel prices in the Russian Canadian situation, that North Sea oil might have a wee bit more life in it than we thought, but certainly I just want to know what the Scottish Government is doing to look, because this is obviously going to be a long-term issue, and indeed behavioural change is a matter that's always going to be with us with regard to taxation. Okay, it's a latter point about behavioural change. One of the principles is obviously efficiency, which captures about, because we don't want tax policy that leads to distortionary effects, which ultimately undermine the objective of revenue raising. So that's built in as a well-understood principle, because in the Scottish approach to taxation previously, it's one of the other principles. So efficiency and unconscious of the impact of behavioural change is something, as I say, it's one of the six key principles. North Sea, fundamentally comes down to just transition. These are highly skilled workers, and the task in transitioning away from oil and gas is to ensure that we retain those skill sets and are deployed within the emerging technologies and renewables in the wider green economy. And to that end, through the support of £500 million of investment, I'm going to commit to the north-east as part of a wide range of other interventions across the employabilities for your national transition training fund, for example. So, ultimately, the task is about growing highly skilled, highly paid jobs in the green economy, and that, to an extent, will be able to absorb much, you know, the skilled workers and talent that will see opportunities within oil and gas decline, as that declines as a resource in an industry in the coming years and decades. And those workers' aim is to effecting that just transition, is to allow them to transition into opportunities in these emerging renewable areas, which have the potential to be highly skilled, highly paid jobs, and such compensate for the loss of the jobs in oil and gas. I think that some of them might just find it easier to move to Saudi, actually, and pay their taxes over there or something like that, you know, if we don't actually get the highly paid, highly skilled jobs that we're talking about. But anyway, let's move on. I'm going to open out the session to colleagues around the table. The first person to ask a question will be John DeFaule by Daniel. Thank you very much, convener. It's unusually for me to get in in a second, so that's very nice for a change. You've mentioned council tax reform and that it's going to citizens assembly and so on, so could I press you in that little bit for a timescale? What is the soonest we could have a replacement tax in place? It's a fair question. I'm not in a position just to be upfront to give you a concrete timescale at the moment. It's a commitment, it's a key priority, it's something that I'm working to take forward. I think that it's supposed to answer the question directly, is it? I don't want to pre-emphote the outcome of a citizen assembly would be. Now, if we think about the word... Although it could be assumed that it will not be to support council tax. But it's not just council tax, it's the resourcing of local government in council tax. So there's a question of the process that leads up to that, the engagement with COSLA. But ultimately what a citizen assembly through its deliberations decides upon, I can't pre-empt. And ultimately what comes out of that citizen assembly will have to be considered against the framework that we're discussing for today. And a key part of that will be on delivery and administration. Now, there's a range of possibilities. I don't want to start indulging in speculation but I'm sure members can imagine a range from relatively minor changes to quite significant and fundamental reform. What emerge on that spectrum, some elements could be addressed fairly straightforwardly, other would, for example, potentially require primary legislation. So there's a broad array of possible outcomes. So that's why it's difficult for me to at this particular stage to say how quickly anything could be implemented. Could we at least have a range then? I think that most of the parties here are against council tax, so therefore we'd need a new tax, therefore we'd need primary legislation. Presumably that could not happen before the next election. But what's the far away distance? Are we definitely going to have something within 10 years? I think that there's a recognition that there's a process as well involved in legislating any way, a process, a bit of implementation, and I think that there's a recognition that that in terms of actually going from where we are now to a new system being fully embedded and operational would go beyond the lifetime of this Parliament. But what the commitment is to do within this Parliament and to do at pace is to do the groundwork to establish a citizen's assembly and allow for that citizen's assembly to be able to report back to Parliament in sufficient time so that Parliament can consider what its response is. I'm not arguing against any of that. It's 31 years since we had the last revaluation, so there has been quite a lot of groundwork done over the last 31 years. If it's say going to be 10 years before we get a replacement tax, does that mean we need a revaluation in the meantime? As I see it, some properties in perhaps in the better off areas have gone up in value say 10 times since 1991. In a poorer area like mine, they've been up a lot less, which suggests that in a poorer area my constituents are paying more council tax than they should be and in richer areas they're paying less. If it's going to take a long time, should we not have a revaluation in the meantime? No, it's not our policy to have a revaluation of council tax at this time. What we are clear on is we have a commitment through the joint agreement for the Scottish Green Party that we're going to have a deliberative process culminating the citizen's assembly to look at sources of funding for local government, including council tax. That is going to be delivered within this session of Parliament. It is a priority for me as Public Finance Minister. We're taking that work forward. Ultimately, it will be for Parliament and Government to respond to what the citizen's assembly ultimately concludes should succeed council tax or what in council tax should change. The moment that we're in a report, we can provide ahead of that certainty and continuity with existing arrangements on council tax. Once the citizen's assembly has had the opportunity to consider the matter in detail, we can then take on board those recommendations and move forward from there. On a different subject, the plan was to assign part of VAT. I think that there have been practical problems with that. One of the reasons for assignment, if I'm not mistaken, was that the European Union would not allow us to vary VAT within the UK while we were in the EU, but that constraint, I assume, is now removed. What is the Government's position on VAT? Is that something that we're discussing with the UK? Our position is that VAT should be devolved. For the areas that we would like to see devolved, we would like to see notwithstanding our overall constitutional position as clearly understood, but in the context of the fiscal framework review and what further devolution could take place, full devolution over the remaining aspects of income tax, national insurance contributions and VAT, which is something that, as you rightly stated, would be achievable in a way in which it wasn't when the Smith commission and the 2016 Scotland act were passed. I think that we would recognise and I know that this is an area that the committee has explored. The previous committee in the last session explored some of the challenges around methodology with VAT assignment. Fundamentally, it's important to remember that VAT assignment isn't a power that's an accounting mechanism. There is an opportunity to look at the full devolution of VAT and that's something that we would want to see considered as part of the fiscal framework review. You mentioned national insurance as well. I'm quite keen. I don't know how far ahead the Government has thought about what it would do if it did get national insurance and maybe fuller control over income tax. I'd like to see the two combined and a much, much simpler system. Has the Government done work on that kind of thing or is that too far down the road? That's too far, but obviously the important thing with national insurance contributions is its interaction with the benefits system. That's got to be borne in mind as well, and a significant majority of social security is still reserved and controlled at Westminster. However, the framework provides a means of considering and scrutinising any proposals around new taxes to be devolved and indeed how they should be implemented and delivered. However, where you can perhaps say a practical immediate piece of work that could be done around national insurance contributions to be able to be devolved is addressed in the marginal way in which you have the gap between the Scottish higher rate and the UK upper earnings limit. There something could be achieved relatively quickly. Fundamental consideration around the role of the tax and how it interacts with income tax more broadly would be a complex matter. I think that the methodology outlined in the framework would provide a way of considering any changes in scrutinising and testing proposals. I accept that that would have to be what would happen. We'd do something minor to start with and then we'd be more major. I think that the final issue that I want to touch on is what about completely new taxes, which I think, although we have to get Westminster agreement, it is a possibility, but we've not done very much on that. For example, it has been suggested over the years that we don't really get enough out of the whisky industry. It's a huge export and a production tax on whisky, say a pound of bottle, could make quite a difference. Have you any thoughts about completely new taxes? Again, we are obviously open to proposals, and I think that you are referring to as a section at ATB in the Scotland act, but that is not without its significant challenges. It requires the agreement of the UK Parliament as well and also has to be run through a set of tests. I think that it could be quite a challenging process. I would just give an example of some of the very basic requests that we have made to the UK Government around the aforementioned national insurance marginal rate or on aspects around VAT and refurbishing properties where we have not been able to make progress in these simple areas. It does not bode well for dialogue on the potential devolution of new national taxes, but we keep under review. As a framework set out, it sets out a process about how that could be considered. I don't represent anything that you want to add, Alex, just about the process for devolution of new national taxes via ATB. Yes, so there was actually one new national tax added into the Scotland act, which was in relation to wild fisheries. That was a very specific measure and had a very specific context. We do not really see that as being an example of something that would be akin to something substantive in the way that you are describing it. There would have to be a process whereby we would engage with the UK Government, go through their tests and then there would have to be legislation Westminster and obviously in the Scottish Parliament. It is difficult to say how long it would take, because it is a case-by-case situation, but we would anticipate that that process could be quite lengthy. That would be something that we would have to work through in order to get to a proposal in the end. Just to clarify, I did not realise that, if we were to have a new tax and I will stick with whisky production tax Westminster, we would have to legislate on that first. The mechanism that the minister mentioned is section 80B of the Scotland act. That requires secondary legislation at Westminster in order to add the powers for the devolved tax into the Scotland act. At the same time, we would have to be making progress on making arrangements for the tax in Scotland, which I assume would need primary legislation in the Scottish Parliament, plus all the arrangements that are required for collection and administration with Revenue Scotland. There would be those two parts of the process, but what the minister was referring to was the dialogue and engagement between the Scottish Government and the UK Government around a willingness to devolve powers in relation to a particular tax proposal. That would also be part of the process. In some ways, you are saying that, with devolution of taxes such as national insurance or income tax, which we have already got partial control of, it takes a long time with Westminster. In some ways, from their point of view, can you not imagine that it might be cleaner just to give us a completely new tax, which does not affect them in a sense, whereas, obviously, everything that we do in income tax does affect them? I do not know, it is just a thought, but maybe they would be willing? Obviously, you appreciate the Government's view that we should be at this Parliament to enjoy the full fiscal levers that an independent country would enjoy, and certainly, in short of that, within devolution, we have highlighted three areas in income tax national insurance and that where we think we can be further devolution. The question, ultimately, would be a matter with a proved-to-be mechanism, is that the UK Government would have to make a judgement as to whether or not they felt any new national tax in Scotland impacted upon the wider UK economy, and that is where the challenge would arise. I would like to follow up some of the lines of questioning that you commenced. I think that the fiscal framework for tax is useful, but I think that, in a sense, it is incredibly high-level, and I wonder about the specifics and actually how things are measured. I want to follow up on what the convener was asking. The Scottish Fiscal Commission set out very clearly the issues that we are facing over the next four to five years, both in terms of shortfalls and income tax and, indeed, welfare commitments, the combination of those coming to close to £1 billion. The fundamental dynamic here is that if income tax receipts per capita grow more slowly than the growth per capita across the rest of the UK, we receive less money to spend on Scottish Public Services. Given that, it is so fundamental to the way that public finances work in Scotland, why is that not laid out specifically and explicitly within the framework? Well, what you are referring to is to one specific tax, income tax. This is a framework for all tax in Scotland, and it is looking at the decision-making process that underpins that. Of course, we set out the fiscal cycle and how we seek to, with regard to the decisions that the UK Government takes. You made the point that it is a high-level document. It is indeed a high-level document. Decisions on individual taxes are taken as part of the budget process. What this document is setting out is the way that we go about, in a high-level sense, our approach to tax policy overall and the principles and objectives that inform how we go about taking those particular decisions. For example, you make a point about the SFC forecast, and it is obviously important to acknowledge that they are forecasts, and we are coming out of quite a volatile period. You would then want to consider decisions against the relevant principles. The principles that you are looking at are perhaps the objectives that you are looking at are stable revenues. Where are the stable revenues as one of the strategic objectives? How does that align with the decision-making process on income tax? If we look at income tax in terms of forecast in Scotland before we take into account the block grant adjustment, income tax is forecast by the SFC. Income tax returns are forecast to increase year on year. The challenge, ultimately, of course, as you correctly identify, is the relationship with the rest of the UK and the faster growth in earnings. Ultimately, in terms of what we are doing with our tax policy, we are increasing the revenue raised in Scotland year on year. The challenge comes with the operation of the fiscal framework. Again, that is something that should be considered as part of the review. That is my point. Given that that dynamic in terms of the growth on the average receipt per capita determines so significantly what is ultimately—I need to double-check, but from memory, it is about 20 to 25 per cent of the revenue that we have to spend in Scotland. Certainly, in terms of overall tax policy, the Scottish Government has it's control. You correctly say that there are a number of taxes—this is about all tax—but the lion's share of that is income tax. It dwarfs all the other taxes that we have at our control. Given that that is such a fundamental dynamic, it is so important for determining whether we have more money to spend or less compared to pre-devolution. I wonder why that is not explicitly stated. In your answer, you said that, given that the fiscal framework is complex, why is it not baked into the framework? I just do not really understand. It is because it is about how one specific tax operates. That document is designed to be high-level and to be accessible and to inform and to provide transparency about the way in which we take decisions. For example, if we were to go and have a deep dive into the operation of the fiscal framework and block grant adjustments for income tax, it would necessitate doing it across every single tax that is referred to within the framework. As such, it goes from being a concise, high-level document that seeks to provide clarity into something that is quite dense and ultimately would not be realising what its stated purpose is. Of course, there is voluminous material on the operation of the fiscal framework. We set out our income tax policy as part of the budget. We have a specific debate in Parliament at rates resolution, so there is that opportunity for fuller consideration. Of course, we are transparent on how we go about engaging with the UK Government as regards to the upcoming review of the fiscal framework. I take the point, but ultimately, if you start going into a huge amount of detail on the operation of the fiscal framework within the document, it starts to lose its overall purpose. I do not know perhaps how consideration was given to what is included and what was not included within the framework in terms of how it was developed, and maybe it can help to elucidate some of the points that I am trying to make. I think that you have covered the essence in that this is a framework for tax, it is about tax policy making. It does talk about continuous improvement, it does talk about evaluation and we have evaluated income tax policy changes that were made, but I think that the question is more geared about a tax performance issue in relation to income tax. There are things that are in the framework that refer to that issue and how we will have to continue to try to understand what is going on there as part of that process. Fundamentally, by design, it is quite a high-level document because it is talking about the way that you approach tax policy overall and not necessarily how you would approach or deal with a specific issue in relation to tax performance. I am not sure whether that is helpful, but... Yes, I will think about that, whether it is helpful or not. Let me move on a little bit. You just mentioned evaluation, and evaluation is really important, but there is not a single reference to how that evaluation will take place, certainly not in terms of measurement. I am just wondering why a broad approach to what measures would be taken into consideration to assess the various elements of the framework that was not included. Is there a specific aspect of evaluation that you are concerned with? Is it evaluation overall of how the framework works? You have four objectives. Stable revenues, wellbeing economy, national outcomes and responsiveness to societal shifts. If you have objectives, surely you should have a way of measuring them? Well, we are committed to wellbeing economy metrics with the national performance framework that is published online and is routinely updated to demonstrate a performance against the national outcomes. With stable revenues, we have a process of reporting through outcomes, consolidated accounts and a budget process, so in response to societal shifts. It is ultimately something that is reflected as and when it happens and what the policy response would be, so maybe how one evaluates that is slightly more challenging. However, in the other areas, stable revenues, national performance framework and wellbeing economy, which we are going to be developing the metrics on, there is clear data that will be provided to allow any individual or organisation to allow Parliament to evaluate independently, as well as allowing the Government to evaluate performance of tax. Those means of evaluation exist independently of the framework. By definition, you are talking about broad areas that have a huge number of metrics attached to them, especially wellbeing. Are you saying that each one of the measures is of equal value? How do those get compared? How do you even compare the different objectives and balance them? There is not even a high level of reference as to how you would balance or compare the different objectives that you have in your framework. Is that not a fairly fundamental point of a framework? It is, but ultimately, those are going to be a reflection of judgment and values. It is important, as well, to understand the interconnected nature of those aspects. Stable revenues are fundamental to delivering the public services that we require for a wellbeing economy. A wellbeing economy is fundamental to achieving the national outcomes, and the national outcomes themselves of creating a society that is welfare, more prosperous and fairer is going to be fundamental to creating the conditions to generate further revenues and create sustainable revenue, so that interrelated and shouldn't necessarily be looked at independently of each other. There is a correlation and we are mutually complementary. That is a bit of my point. I want to come back to a very specific point that the convener raised around non-domestic rates. If you are saying that this framework should be responsive to societal shifts, then, given everything that is going on, given that online sales are now between a quarter and 30 per cent, depending on the point and time that you pick of total retail sales, that would suggest that you have to have a fundamental review of non-domestic rates, especially if you are using this framework properly. I take the point that you are making. Specifically on non-domestic rates, we had Barclay fairly a few years ago, and that is still to be fully implemented by the revaluation, but I will say that you will have noted the report that Fraser Vallander Institute undertook on the small business bonus scheme. I think that one of the key findings that emerged from that was around data, and that is something that we are reflecting on very carefully. We are going to establish a short life working group to look at this in more detail, because I recognise that it is fun that if you want to get to position where you want to look at more reform of non-domestic rates, I think that the starting point is to make sure that we have the data to inform that particular policy conversation, so we are looking very carefully and reflecting very carefully upon the FAI report, particularly on that aspect around the need for more data, because I think that we would recognise that there is not always a direct correlation between the rateable value of a property and the performance of the business that uses that property, and so a way to help to address that is to ensure that we have robust procedures and mechanisms in place for gathering data, but I think that the lack of data was a key issue that the FAI identified, and addressing that I think is a prerequisite before we start to think about broader considerations around policy reform. Although the data points that I was referencing were from the national audit office, so they are at a global level. There is. Was the review of business rates in England, as you'll be aware, and ultimately, where they landed on, was ultimately recommending that in England we should start doing things that we already do up here, you know, and the shorter revaluation cycles, intervention such as the equivalent of the BGA. It's an example of a neighbouring jurisdiction that is considered this issue. They did not land on a proposition for fundamental and wholesale reform, but obviously one of the things that we are committed to looking at is, for example, around an online sales tax, which I appreciate in the retail context, and some of the challenges at town centres and high streets have been facing has been a ask. That's a commitment that we've undertaken. It was a manifesto commitment to look at, for example, an online sales tax. I recognise that there's been various calls, not the language that I would use, but around levelling the playing field is how it's been characterised by some stakeholders. That's something that's taken forward, but we also have to be cognisant of the work that the UK Government is doing in this area as well, and the potential for the UK-wide digital sales tax. To go back to the original point about NDR, we have to effectively get to revaluation and letting Barclay bed in, and then we're considering, in detail, how we want to respond to those are key points that are identified by the FAI, but I think that we'll recognise that having the data in place to inform, to allow for a more informed discussion around potential options of further reform is a first step. Sticking with that point of the digital sales tax minister, when the paper mentions that the Government's going to explore that, are you in a position at the moment to give us a bit more detail on how that process will be taken for? Presuming that a UK-wide sales tax is not forthcoming the immediate future and with the difficulties that have been mentioned already this morning about the devolution of new national taxes to Scotland, is that something that you're considering exploring with COSLA as a potential local taxpayer? I'm just keen to understand how we're going to move forward from a commitment in principle to explore it into a process that would flesh that out. You flag up one of the challenges around how you actually move from idea to implementation. I think that at this particular stage it's want to see what's happening at a UK level first. I think that we need to have that sense of what the largest tax landscape is going to be like before we can proceed. I just don't think that it would be the most effective deployment of resource at this time when we may find ourselves in a situation that we can work up with a proposal only for it to be superseded by something that is implemented from Westminster. We have to see how that process pans out. Obviously, if the UK Government is in a position for it to decide not to legislate a progression in this area, then we can consider how we can take that forward. However, as I said, it's something that is referenced within the framework. It's a manifesto commitment. It's a shared principle between the Government and the Scottish Green Party and it's something that we want to see fully explored, but we have to wait and see what the UK Government is doing first. I will return to the convener's original line of questioning about fiscal sustainability. We know that we will need to significantly increase tax revenues to plug the gap with the shortfall on income tax that is forecast, the increase in social security spending and then on top of that the additional spending that I think that we all acknowledge is going to be required to hit our child poverty and climate targets in particular. A lot of the discussion this morning and a lot of what is referenced in the documents so far takes the approach of emphasising the need to essentially grow the taxable economy, increase economic performance, etc. That points have been made already around folk and higher income tax bans replacing those who are moving out of the on-gas sector, etc. Is the Government's position that the wider changes in economic policy, wider improvement in economic performance is the primary way to increase tax revenue, or is there an acknowledgement that there will need to be direct changes to tax policy as well for to increase revenue by the amount that is likely required? The point that Mr Johnson made in recognising our disproportionate reliance upon income tax as our primary devolved revenue raising mechanism is an important one. There are limits to what we can do with income tax before we start risking the points that the convener raised at the opening of the session around distortionary effects, behavioural change, and then you can start to see potential risk losing revenue. I know that this was an area that the previous committee explored in the last session. While we will always consider how we can best use our net policies on income tax, particularly on that strategic objective of about being responsive to society shifts, fundamentally the key task is to grow our tax base. How we seek to achieve that is ultimately set out within the national strategy for economic transformation and supporting documents. We will always look for ways in which we can ensure that a tax system is efficient as possible and maximises revenue. The key challenge is to grow the number of high-paid, high-skilled jobs in Scotland and, in turn, that will directly lead to increased tax revenue. Alex, if you can give some context about how the document was developed in relation to a broader economic sphere, I am conscious that we have a focus on tax, but how the document has been formally working on a cross-government more widely and particularly with parents to the question that Mr Greer had asked about the interaction between seeking to raise revenue by direct taxation or increasing the tax base? I think that there is no need for those two things to be looked at separately. It is all part of the same system. This is a framework, by the way that we make tax policy. It talks about how you look at decisions in the round and that is something that we have spoken about, but that is how decisions are made. The question that you are asking touches on lots of different aspects of the Scottish budget, how we set our devolved and local tax policies, how those taxes perform and how we set out our spending plans—those things all interact. I suppose that the answer in terms of the framework is that this is a framework that is telling the public and stakeholders how we make those decisions in the round and the factors that we consider and weigh when ministers come to make those individual decisions. Thanks. I will turn back to the report that you mentioned a couple of moments ago. Minister Fraser and Valmond reported into the small business bonus scheme. The top-line conclusion that I drew from that report was that there is essentially no hard evidence that the small business bonus scheme is improving economic performance. Could you comment on that? I know that the Scottish Government is still developing its full, formal response to it, but do you have any initial response to that? Given the amount of money that is put into the scheme, it seemed an alarming conclusion for such a respected institute to essentially say that there is no evidence that this is working. I would respond by saying that absence of evidence is not evidence of absence, and it comes back to that point around data. The challenge is actually having the data to evidence the impact. However, I think that what we do know is that the support for it, for example from the FISB, was a recognition for many of the small businesses that are benefitted from it, they value it. Of course, I take the point that you make around the need for more robust data rather than what could potentially be characterised as opinion at anecdotal. That is why the key recommendation, the key take from the report around data and the need to enhance the amount of data that we have, is an important one that will allow us to be more effective in shaping policy. Whether that be specific reliefs or whether it be for future consideration of more fundamental reforms, the key issue is data. However, in my experience in engaging with businesses as a minister, and as a constituency representative for the past six years, the scheme is very much valued by the businesses that receive it, and it has been regarded by many, I apologise for misquoting, but I think that it was described by the FISB as a lifeline. It is important that we carefully consider what Fraser Ballander has outlined in the report, and that is why we are going to establish a short-life working group to consider it in more detail. I agree absolutely with the FISB that we need a tax system that supports small businesses, but if you forgive me for being flippant, if we ask those who receive free money, is it a good idea that free money is given out, of course they are going to say yes. Fraser Ballander's institutions conclusions were concerning given the amount of money that is involved, so just to dig down on that a little bit deeper is the final question. What exactly is the data that we are missing? Even before the report was put out, the tax framework document itself will pursue a greater understanding of the drivers of devolved tax performance. What are the specific points of data that we are lacking at the moment? I think that what I made reference to earlier was that there is not necessarily a direct correlation between the rateable value of a business's premises and their overall economic performance, that is a key one. That is part of it. However, as I said, I do not want to respond prematurely before having given this the full consideration. As I said, I want to establish a short-life working group. As I responded in answer to the parliamentary question last week, I will of course be happy to update Parliament in due course once we have an opportunity to fully consider the report. However, I would just want to reiterate what I have said previously. It is a very much value report, and I think that it is an important contribution. All the points that have been raised are pertinent. I do not know whether there is anything that you would want to add, Alex. No, I think that you have covered it. The federation of small businesses did say around a decade ago after financial crash that without the small business bonus scheme around one in six small businesses in Scotland would have went bust. The question is how effective it is relative to the potential of other measures. Minister, you cited this morning that an effective tax structure is one that delivers what it says on the tin, and you cited the four principles of Adam Smith about what is good about the Scottish tin. I would say that an effective tax structure also has to be one that delivers the effective revenue that we need, specifically when it comes to addressing productivity and economic growth. That is something that, as you know, has been flagged up by the Scottish Fiscal Commission, Fraser Vallander Institute and Chambers of Commerce as being the serious concern for the Scottish economy. Both the convener and Mr Johnson made the point that, although income tax revenue is just one part of the revenues that we can hope to receive, it is a major part. What I would like to ask you is about some of the concerns that the Scottish Fiscal Commission, particularly Professor Alistair Smith, raised about those returns. Professor Smith was saying to us very clearly that when it comes to some of the regional aspects of income tax returns, there are areas such as the north-east that have been relatively productive in income tax revenue, whereas other areas have not. Can I ask you exactly what statistical analysis is the Scottish Government doing to look at the projected changes in the industrial policy, which will affect employment, in each of the regions of Scotland, to analyse what we think might be better revenue returns in the future? What data is being used for that? Okay. I might ask Alec to come in, just on that particular point, on data and how it informs tax policy. To bring it back to this document, what we are saying is that when we are setting tax policy and when we are managing taxes, we are looking for data that tells us how our taxes are performing. In terms of the very specific question, I would be happy to come back to answer that in a specific sense, because I am not afraid of the particular data sets that you are referring to. Professor Smith was arguing that if there is a downturn in the oil and gas industry and that projection works out on the same basis that we have had since 2014, revenues started to decline, if that continues, then something has got to come in to take its place in terms of the revenues that will accrue from employment in other industries. What I am interested in is how well are we likely to be when it comes to the economic growth from other industries, i.e. oil and gas, in some way like the north-east, that can replace those revenues. That is the statistics that I am interested in, because that will inform us about what is available in future years. It is touching back to the question that Daniel Johnson might have been earlier on. If one oil and gas is no longer there, what takes place? That is where we have a concentration of higher earners. I will go back to the point that I made before that comes down to the opportunities that are presented through the transition to net zero. We have to make sure that that is a just transition, but ultimately that is where the opportunities are going to rise. We know that there is particular strength in the Scottish economy, be that in food and drink, tourism, life sciences and higher education. There is an array of areas, but the opportunities ultimately are going to come in terms of the jobs that are ultimately displaced by the transition to net zero, by jobs that are involved in delivering net zero. Precisely that minister, and that is surely the important data that we need, particularly in the next four or five years, where the projections from the Scottish Fiscal Commission on income tax revenue are really very weak. Is it not the case that we need very strong data about where the displacement from oil and gas would come when it comes to other industries and people who would be able to earn equivalent, high sums of money that lead to increased revenues? Is there some analysis that is being done to work out where the high-level industries of the future will be to improve income tax revenue and therefore improve productivity and improve growth? I will just bring it back from income tax levels, the general economic performance. That was captured in the evidence paper that is provided with it, but if I can take that away and reflect it because I think that it is fair points and I am conscious of the point that I made earlier on about the need for this framework to remain a concise high-level document, but probably what you are driving at is one of the strategic objectives in regard to stable revenues. That needs to be unpacked to some degree to highlight those particular points. Minister, it is an absolutely crucial area because if the Scottish economy is going to improve and do really well, as we all hope it can, because it has got, let's be honest, a lot of potential with it, the fundamental point at the moment, which I think just about every member has mentioned so far, is that we are not doing as well as we could be just now because our income tax revenues are depressed and are obviously not growing strong enough in relation to the block grant adjustments. Time and time again, when this committee has taken evidence from economic specialists and obviously from the official forecasters, that has been the central point. What I am driving up is the data that we need to inform the policy that the Scottish Government will have to engage with to ensure that, as I say, those revenues increase and that we are much more ffiscally sustainable for the future, because at the moment Scotland is lagging behind. In terms of the asked to draw a more explicit link between tax policy and economic policy, we are considering almost this here in isolation as a tax framework, so I take that on board. The key point to bear in mind, of course, is that our income tax revenues in themselves are growing. That ultimately comes down to the different make-up of the economy in other parts of the UK. I think that we are all familiar with the concentration of financial services in London and the south-east and the impact that it has upon inflating earnings overall elsewhere in the UK and the challenges that it creates. It is important that we look at what drivers of earnings and economic performance are. That is what we are setting out our vision for that in the national strategy. Equally, we cannot lose sight of the impact to the block grant adjustment and the need for that to be processed and to be considered as part of the fiscal framework review. I take the point about economic performance and the need to maximise opportunities and prosperity in Scotland, and that is what we are setting out through the national strategy for economic transformation. We cannot lose sight of the block grant adjustment aspect as well, and we just have to bear in mind that income tax revenues are forecast to continue growing in Scotland. I do not disagree, minister. The block grant adjustment is essential, but so too is a tax structure that benefits Scotland in terms of increasing productivity and growth and being encouraging to investment. It was raised by the convener earlier that he mentioned the fact that there is potential for internal migration from other parts of the UK so that people come from other parts of the UK to Scotland, not to retire but to be active in the labour market. What analysis has the Scottish Government done of those people who have come to Scotland about the reasons for them coming, where have they gone and on what basis has their productivity in addition to the economy being available to those who are looking at tax policy? The income tax valuation that we published was more specifically geared towards trying to understand whether our income tax policy choices had created or generated migration effects, and the broad finding was that they did not. We have been able to understand that to some extent. I think that the question that you are asking is about whether our income tax policy would, for example, have a role to play in whether people would choose to come to Scotland. That is not the focus of the income tax valuation, but it is obviously an important question. I am not aware of particular data that we have that can answer that question specifically. There are 700,000 Scots living and working in England, so it is not to mention those overseas. Clearly, if we had a strong growing economy, then maybe fewer people would feel the need to move south or overseas. Thanks, convener. I just want to pick up on a couple of points that have been made this morning. One is oil and gas. How many high-paid, high-skilled jobs were still linked to oil and gas at present? I am trying to work out what modelling has been done by the Scottish Government on the decline in oil and gas, what that is going to mean to the Scottish economy, and what data is there available to see the impact on the Scottish economy? I do not have specific data in front of me with regard to what the forecast number of people working in oil and gas is going to be in five years or 10 years. Clearly, that is something that is driven by a number of factors, and from a public policy perspective, by many levers that are not within the powers of this Parliament, I think that we would all recognise. The fundamental point that I am making is that the transition away from oil and gas, as we all understand, is going to be a global phenomenon. It is an imperative. It is required. Without it, we are not going to meet our 2045 targets. The broader policy objective is that we have a just transition that enables people who are operating in that sector, with the high skills and expertise that they bring, to deploy that within the emerging opportunities of a green economy. To deliver our just transition to net zero, it is going to present significant economic opportunities. From a tax perspective, the objective would be that people who are operating in that sector, not just directly in that sector but all sorts of other sectors, would have the opportunity to move into those high-skilled, high-paid jobs, those good-green jobs that we want to see. As such, that would help to provide a steady tax base to generate the revenues that we require. However, it does not sound like you do know if it is going to be a steady tax base. If you have not done the analysis, you have not done the modelling, I am thinking about a list on oil and gas platform just now. There are maybe four or five hundred people associated with that in terms of maintenance and being on it. When you look at an offshore wind farm, the number is considerably lower. When we are being presented with figures on forecasts, how can we be assured that that is right? If you have not done the modelling, how many jobs are going to be employed in the green economy, and how many jobs are going to be lost in the oil and gas industry? Is there anything that you can add, Alex, on the data that we have available? Just to make the point that we do analyse income tax data, we get out to end data. There is a lag, obviously, in terms of income tax data, but it is analysed. That feeds into the SFC forecast, the OVR forecast and how we understand how the tax is performing. Then there is a question of how does the operation of the fiscal framework then result in effects on the Scottish budget? Your question is more geared towards economic data quite specifically in relation to the oil and gas sector. We know that the oil and gas sector was a tax-rich sector. That part of the income tax distribution is important and of particular interest to us when we try to understand the SFC forecast and then try to understand the data. All those things feed into our on-going analysis and how we take tax policy decisions. I am just thinking more about the projections that I had. We have given quite a lot of data at times and we are looking at the divergence between Scotland and the rest of the UK when it comes to our economic performance. There must be some projections on how many higher-rate income tax payers there will be over the next five or ten years. There must be numbers being used for oil and gas when it comes to making those projections. Those are factors that get taken into account in terms of the SFC's forecast. The SFC will make judgments about that sort of thing and think about the forecast. We will analyse the out-turn data and the forecast, and we have our own analyst who will look at those factors in terms of the overall income tax, out-turn data and the forecast revenues. It is something that gets looked at in that broader context. As for the specific data that you are asking for, I would have to come back on that specific question about what data the Scottish Government may or may not have because I do not have those facts at hand. I think that it would be good to know. It would be a good assurance to know that some of the data is there or whether the Government is just crossing their fingers to wait and see. We need to know that. I do not think that the approach that is being taken is that kind of approach. If the data is there, it would be good to see that. On the citizens assembly for local government funding, what is the exact remit of that assembly? That is not determined yet. Ultimately, what we have is an agreement in the shared policy programme with the Scottish Green Party. We are at an early stage in how we are going to develop the process, but we are going to be working at pace. Clearly, any remit has to be consistent with what is in the policy programme, so the resources of local government, including council tax, and it will ultimately be for the citizens assembly as well to consider what particular issues it wants to explore within that remit. As I said earlier, I would not want to pre-judge. Is this when I think of local government funding? I do think of things like non-domestic rates. Will that be in there? It seems strange that there are commitments being made, especially when you mentioned it today about the small business bonus scheme. There are commitments being made on changing who is going to be liable for council tax, for example. It is almost like the assembly's hands are being tied before they are starting, because you have put down some ground rules here already. Would that be fair? Well, I take the point that you are making, Mr Lambson. There is a combination of commitments, which are manifestal commitments, which the Government was elected on. They are commitments that are a product of the joint agreement with the Scottish Green Party. Fundamentally, what the citizens assembly will produce will take time to implement. I think that there is a recognition that, depending on how significant and how profound any of the changes that are advocated for, it could take some check time to implement between legislation and potentially a period of implementation beyond that. The other measures that we have committed to, such as maintaining the small business bonus for the lifetime of the Parliament, should at least 100,000 businesses benefit from it, is a commitment for the life of this Parliament, which we are elected on. A commitment on council tax with regard to extending exemption to number 22 is a commitment that we will deliver in the lifetime of this Parliament. That is something that is a commitment to. It is there. It is providing that certainty. That is something that we are going to implement. We are sitting in assembly. Ultimately, there is an element of the unknown in the sense that I cannot predict what the outcome of that assembly is going to be. It is the assembly to engage in these deliberations and to bring forward proposals. I am very conscious that I do not want to see anything that would seem to pre-empting that particular process. We all recognise that there have been long-standing discussions and debates about local tax sessions. All parties have engaged in particular pieces of work, either independently or on a cross-party basis, to explore potential changes and amendments to replacement for council tax. We would all be keen to see what the assembly comes up with and to give the proposals that can emerge from that process, the due consideration and respect that we deserve. The remit will not be for assembly to determine. That will be for the Government to determine. Is that correct? The remit will be consistent with what we have, what the agreement was with the Scottish Green Party, which is already outlined. It is back to me. It is a bit non-domestic race. Is that going to be part of the remit or not? I am not in a position to outline what will be specifically within the remit at this particular place. There is a commitment through a deliberative process, engagement with COSLA, and I would not want to pre-empt that, but I can assure you that Parliament will be kept fully abreast of all proposals as they are developed ahead of the citizen assembly's work. Those businesses that would like to see reform of non-domestic rates, they are not really going to get any comfort from the citizen's assembly, are they? I am not concluding what the citizen's assembly may or may not choose to deliberate upon. As I said, you can look at the exact wording that is referred to in the framework for tax and the programme of work that we are undertaking. It is incumbent upon me to ensure that the remit of the citizen assembly reflects that shared policy commitment that was agreed with the Scottish Green Party, and it will. In terms of timescales for the remit then, following on from John Mason's question, we have no timescale for the citizen's assembly, but we have no real timescale for the remit either. What I would say at this point is that we are working at pace on it. That is not a timescale, minister. It almost feels like the can is being kicked down the road on this. No, the can is not being kicked down on the road on this. I am not in a position yet to announce timescales, but when I am, I will make sure that the Parliament is the first to know. Good morning, minister. I have just got a couple of short questions at the end. When I read through the framework for tax and asked myself what word jumped into my head for how I felt about it, it was probably unobjectionable. It does what it says in the Scottish Tenor, as Liz Smith says, but picking up on a comment from the vice convener, I thought at an overarching level what specific and measurable difference will the framework make, because there is little to object to it in the Irish clarification. I appreciate that. Not just at a more detailed level, which the vice convener was asking about, in general terms, how do you know that it has been a success? I have touched, I think, the previous question around some of the aspects around metrics. I will ask him what difference will it make. One thing that I have been touched on is that I made reference to my opening statement. I am very keen that it can help us to elevate public discourse around tax. I hope that the committee knows that I am very keen that, across the range of my responsibilities, it is to have transparency, improved engagement and more substantive discussion. I know that the committee welcomed the work that was undertaken in preparing the guide to the spring budget revision, and that particular approach informs how I want to see the framework for tax implemented. How is a document setting out how the Government will approach tax policy? It also provides a framework and a tool for others to bring forward tax policies by that within Parliament, by the general public stakeholders of civic Scotland. I hope that it can help to act a tool to catalyse a more informed and more recent debate around tax in Scotland and recognise the important contribution that tax makes. That is important in the context of the existing powers that we have. It is also important in the context of any changes that emerge via the fiscal framework review or any subsequent devolution. Along with all the stated objectives around transparency and demonstrating the Government's commitment to on-going engagement and a culture of continuous improvement, one area that it can contribute towards is providing a strong reference point, a foundation for a more substantive debate around tax. I am sure that that is something that we all share with you in the aspiration that we all share. One area that is close to my heart and returning to it again is around tax avoidance, and you correctly pointed that out. The last figures from the House of Commons for tax avoidance last quarter or last year were £35 billion a year. Obviously, we do not know what that equates to in Scottish terms, but it is obviously a huge concern. It may well be that Alex needs to answer this, but how is it structured within the Scottish Government to ensure that there is a focus on avoidance? In the Scottish Government, rather than legislative authorities, local authorities or whatever, do you know how many FTEs you have to look at? Is there a department who heads up that? What management accountability is there for it and so on? I just like to appreciate a bit more information about how it is actually functioning in the Government, given the importance of it. We have to appreciate the role that Revenue Scotland has, and obviously the Revenue Scotland is directly accountable to Parliament, but Alex needs to come in and out. I might be helpful to try and understand the question. You are asking what focus there is on tax avoidance within the Scottish Government in terms of understanding on-going avoidance activity. Yes, so what I am trying to determine is the link between it being a principle and regard that is important. It is specifically mentioned with how that translates into real spend or accountabilities, whether it is Revenue Scotland or so, and how that flows through, because it strikes me that there is a possibility that it might be something nice that we say, but it does not necessarily translate into real resource and real focus on it. I am trying to get more of a sense of that. In the framework for tax, what we are saying is that there is real focus on it, but that focus needs to start from the outset. When policy makers come to consider tax changes or tax proposals, the scope for avoidance activity needs to be a primary consideration at the very outset in terms of policy design. That is what the framework for taxes is saying. It is our job in terms of officials with ministers to live and breathe that in relation to specific policies. In terms of whether avoidance activity has taken place, then it does come down to the tax authority in terms of their reporting. You mentioned the £35 billion that probably refers to the tax gap that the HMRC calculates. There is a distinction between policy makers and the policy making process and whether or not avoidance activity has taken place. That would sit with the tax authority in terms of ministering the tax. There is a loop around reporting on that. Us, as policy makers, understand it and see what we can do about policy design to reduce it as much as possible. However, it is on the face of the framework because it is of fundamental importance to us when it comes to making tax policy and advising ministers in terms of their decisions. In terms of the policy change or advising new policies, as you have set out, what underpinning further detail do you have in there, such as policies to support people? Have you gone as far as developing that? People will look at either changes or new taxes. It is more likely to be changes, given our discussion today. What is supporting information, policies, focus and so on? Have you already got in place to support that? We will think about things such as behavioural responses to policies as part of the process. Whether or not that gets to the point of avoidance activity really depends on the specific situation. It is hard to generalise in that way. I think that what you are asking is how much avoidance activity is taking place. Is that what you are guessing at? That would be great to know as well. We will not know exactly exactly what every individual taxpayer is doing. As the Scottish Government, we will not understand what every single taxpayer is doing. We rely on the tax authority to administer policy efficiently and effectively, which it does. We have a constant dialogue with it if a particular situation comes up. However, as I said, there is regard to policy making that really starts from the outset in terms of how we design policy in making sure that we minimise the scope for tax avoidance. I am not sure whether a framework will answer that particularly well, but I think that what I am saying is that there is a specific element to that in terms of each different tax and the activity that is taking place. The framework for tax is necessarily at a high level. We have talked about that today. All that we can do is seek to make policies that will reduce the scope for avoidance activity. That is what we try to do. It is hard-baked in the process. We do not design tax policy and take decisions in tax policy, but we have given serious and detailed consideration to issues around avoidance. How we can achieve that is obviously through policy consideration. There is the work at the Parliament that is not scrutinised by legislation. Before we even get to that, we are having a continuous dialogue and engagement with the appropriate tax authority who can bring that technical expertise to bear. That is the approach that we take. We are trying to convey in the framework that it is a central concern. It is not an afterthought or something of secondary importance. It is intrinsic to how we go about designing tax in Scotland. You have talked to the minister about how tax-rich oil workers are as a proportion of the Scottish economy. You have also talked about the need for a green transition, but what evidence do we have that people are transitioning from the oil and gas industry into green jobs at the same salary levels that they enjoy in the North Sea? Clearly, in terms of taxation, that is what is critical. It is a fair point. We have touched on that earlier with the limitations of the data that we have available, but I take the points that have been raised by numerous members on the committee around data both in the here and now and with regards to forecast to be able to more clearly evidence that transition as it takes place. That is something that I am happy to reflect on and take away and come back to the committee with in writing. I appreciate that, Daniel. Thank you, convener. In fact, I have two supplemental questions. The first follows straight on from that. That question is broader than just North Sea oil and transition. A number of the answers beg to further questions about what forecasting the Scottish Government undertakes. We know that the Scottish Government is about to publish a multi-year spending review. Presumably, there is going to be forecasting that forms part of that so that the Scottish Government has some view of what revenues will be generated over that same period. Is the Scottish Government just relying on the Scottish Fiscal Commission forecast if so does it do any further interrogation, or is it undertaking its own forecasting? I think that that is quite an important point around what forecasts it uses and where they are generated from. Can you clarify what the Scottish Government is doing? I think that we may be split into two parts. Obviously, we have to—we are under snatch obligation to use the SFC forecast for our budget, so we need to use the SFC forecast. The broader point, I think, is one around economic data and how that can inform economic policies. We are getting to a more granular level about particular individual sectors, regional breakdowns. I think that those are some of the ideas that have been surfaced and explored at this session this morning, but ultimately in the context of an RSR, we have to make assumptions. In a budget-setting process, we have to use what the SFC gives us, and we are also dependent upon what decisions are taken at the UK Parliament as well. We can certainly engage in our independent forecasting, which would be the duplicating existing work that is already taking place. I suppose that the question would be, what is the added value? What would be the additional forecasting and additional work that would be required to inform policy-making decisions beyond just the numbers that are given to us by the SFC? Have I understood you correctly? No, you have not. In your preamble, you said that it is about the how, and it is not about the how. If it is just the SFC forecast, then any dataset is not just the numbers themselves, but what they do in terms of your process. If you could maybe write to the committee and clarify where in the process forecasts fit and what forecasting takes place, and how you use the SFC data, I think that that would be helpful. It is to clarify, because we appreciate, in terms of setting and talking a bit, but I had a big focus here on income tax revenues. It is what the SFC and what the block grant adjustment say that we have to operate with. We can come up with a separate set of forecasts using a different model or methodology, and that is an academic point. What we have to work with is what the SFC gives us. I am keen to get a sense of what is the additional forecasting that the committee would like it asking for the Government to explore. It is not necessarily about the additional forecasting, it is just what forecasting you are using. What datasets do you use? Is it just the SFC? Is there additional forecasting that takes place? On what basis is it broken down? I do not think that it is just about oil and gas, but it is a sexual regional forecasting that takes place. Ultimately, you must be assuming that the Scottish Government has some influence on tax receipts. It is therefore about how is that modelled and forecast and baked into your decision making. An understanding about how that is formally taking place in the decision making process and the Government is pretty important. I am happy to take that way. The second question that I have got. You mentioned that the Scottish Government would seek to have full devolution of income tax, full devolution of VAT and full devolution of national insurance contributions. You just clarified two points. First of all, when you say full devolution, are you talking about the full devolution of both setting but also collecting those taxes? Is it just limited to those taxes or would you also go further down the list because those are the top three taxes across the United Kingdom in terms of receipts? The next one down would be corporation tax. I am just wondering if there are other levies that you would seek to devolve. My estimation on those three taxes would take the total tax revenues in terms of all taxes levied. It would be around 70 per cent of taxation that you would be seeking to be devolved to Scotland if you include the ones that are already involved. Is that roughly what you would estimate it to be? As you would expect me to sort of preface my remark is that you understand what the Government's objective is in constitutionally and what its view is and where fiscal decisions should be taken. In the context of the fiscal framework review, I saw earlier on some of the reasons why some of the immediate polity challenges that we face cannot be addressed by not having control over particular taxes. That is why those three are highlighted. I also recognise the added complexity of this interaction with the benefit system as well. Decisions around the process for devolution, the implementation and the operation would have to be consistent with the framework. We have tax authority, we have HMRC operating with the devolved elements of income tax, which works effectively and efficiently. That was recognised through the independent valuation. We have revenue Scotland for the two fully devolved taxes and local authorities as well for the local taxes. What would underpin any of the approach to questions around operation would be what would be consistent with the framework for tax, and so that is how that decision would have to be taken. We are obviously approaching the fiscal framework with a set of asks. What emerges out of that and would ultimately determine questions about delivery and operational matters? You would be seeking devolution through the framework. Essentially, those additional levies would be devolved in a manner akin to income tax, albeit that there is some debate about the detail of that. Is it just those levies or are there additional levies that you would be seeking to have devolved? What we have set out is that those were the three asks in the context of the fiscal framework review. Should there be opportunities for further devolution of tax beyond, that is something, of course, we would want to explore. A topical example is the issue potentially of a windfall tax, which has obviously been raised in exchanges in the chamber. If there are opportunities for further devolution of tax, that is something that we would want to see. We believe that all tax powers should be in the control of this Parliament. On what our commitment was in prioritising manifesto and what our key focus is, going into the fiscal framework review, or the three taxes that we mentioned, and, obviously, it is contingent on the outcome of that, what the exact operational arrangements would be. My final question is on similar lines, but my curiosity is about why it is those three particular taxes. We look at national terms, VAT and the remaining income tax savings and dividend. Those are quite complicated. For example, VAT, I have got a business in Glasgow, and I then sell supply at another business in Manchester, which then sells something to a guy in Aberdein. I have got all this chain of VATs. It is quite complex. Certainly, in previous sessions, we have looked at how difficult that is and where the UK would suggest that VAT would accrue to Scotland or not, as the case may be. Why have we not picked, for example, fuel duty? If you buy fuel in Scotland, because of the geography of the country, you would probably get a disproportionate amount of it, or, indeed, excise duty. I am pretty sure that in terms of tobacco and alcohol receipts, we exceed a 8.3 per cent population share, so it would give a higher proportion. Those taxes are surely much easier to collect. This is, of course, assuming that the UK Government was in any way interested in actually devolving those, but why have you picked the priorities that you have picked relative to some taxes, which, frankly, would be a lot less contentious in terms of how they are calculated and would be much easier to deliver and bring in a higher proportion of revenue? Do you identify the tension between administrative complexity and policy impact? The taxes that I have referred to, particularly around national insurance contributions and VAT, have a potential for significant policy impact through taking these decisions. I am not saying that that is not the case with the other taxes, and I appreciate that, in the context of talking about fuel duty, it is taking on an added dimension with the cost of living crisis and the events unfolding in Eastern Europe, which the framework predates. However, the key point that I would make is going back to the examples of issues that we could address with powers over national insurance and VAT earlier on. For example, the marginal rate that exists between the higher Scottish rate and the upper earnings limit and its implications for the deposit return scheme and our work on decarbonising, keeping building, and some of the challenges that we will be aware of in relation to VAT around refurbishment and renovation of property. There are areas in which it can be impactful. There is also just a question of going in with a clear set of asks and objectives in relation to further devolution of tax policy in the context of the fiscal framework review. As the final point, I would make it just a point that Mr Richard Johnson made, which is to recognise that there are significant reso revenue-raising taxes. Having a broader suite of taxes and a broader basket of such, it means that we are not ultimately reliant and exposed to volatility on income tax alone. I have to say that the choice of taxes to me does not really fulfil, if I was picking some taxes, the four criteria of Adam Smith of certainty, proportionality, the ability to pay, convenience and efficiency. I just think that some of those are so contentious, particularly VAT, in asking who gets what and whether Scotland actually benefits disproportionately or not from an assignment. Anyway, that is no doubt a discussion for another day. I was going to ask some further, sorry. No, I was going to say, as I take the points that you make, but I think that there is also that question about impact. I did make reference to Fugio to be that as a key element across the pump. Again, it is an example where I take the point that you make about the tensions around potential administrative complexity and deliverability, but they can be worked through in a way that is consistent with the Adam Smith principles in terms of how you go about designing and implementing the tax and the devolution of the tax. However, what you actually do with Fat Leaver, what you have at your disposal, that national insurance contributions can be quite impactful and can allow us to shape policies more appropriate for Scotland? Field duty and excise duties are also very impactful as well. Anyway, we will conclude there. I do want to thank the minister. It has been a quite a long session, so I would like to thank you and Mr Doig for the clarity of some of your answers, although there is still a wee bit that the committee wants to hear about further, so we will appreciate some correspondence on that. That concludes the public part of today's meeting. The next item on our agenda, which we will discuss in private, is consideration of a draft report on the resource spending review framework. We now move into private session, but first of all, we'll have a 10 minute break.