 It is now time to move on to the next item of business. Before I do so, can I remind members of the Covid-related measures that are in place and that face covering should be worn when moving around the chamber and across the Holyrood campus? The next item of business is a debate on motion 3019, in the name of Kate Forbes, on Scottish income tax rate resolution 2020-22-23. Members should note that the question on the motion will be put immediately following the conclusion of the debate. I would invite those members who wish to speak in the debate to please press the request to speak buttons now or press R in the chat function and I call on Kate Forbes, cabinet secretary, to move the motion. I now call on Tom Arthur Minister to speak to the motion, around six minutes, please. I would first like to draw the Parliament's attention to the procedural connection between this debate and rule 9.16.7 of the standing orders, which states that a Scottish rate resolution must be agreed before stage 3 of the budget bill is able to proceed. This is the first Scottish rate resolution debate of this new Parliament. It is also the first in our partnership government with the Scottish Green Party. The passing of this motion will put into effect the rates and bans of Scottish income tax for 2020-23, as set out at the budget on 9 December last year. As Minister with responsibility for public finance, I recognise the vital and dynamic role that tax will have in delivering on our ambitions of building a greener, fairer and more prosperous Scotland. Shortly after the budget, the Government is pleased to publish Scotland's first framework for tax, which sets out how we will approach tax policy and make decisions on tax over the course of this Parliament. This framework demonstrates our commitment to open government and transparency. As part of this commitment, we engaged extensively with a broad range of stakeholders ahead of the Scottish budget. I was encouraged to see so many different organisations and members of the public responding to our pre-budget consultation, and I thank them for doing so. Once again, the key message from stakeholders was the need for certainty and stability in the tax system. We heard this message, and we have also been clear that, at a time when living costs are rising, taxpayers in lower income brackets should not pay more tax. That is why we have proposed no change to the rates of income tax in 2022-23. The starter and basic rate bans will increase in line with inflation, and a higher and top rate threshold will remain frozen in cash terms at their 2021-22 levels. The Scottish Fiscal Commission forecast that our decision to freeze the higher rate threshold in 2022-23 will raise £106 million in additional tax revenue. That means an extra £106 million to invest in the widest and best-funded range of public services available anywhere in the UK, including universal free prescriptions and tuition fees. The Institute for Public Policy Research agreed that our Scottish income tax policy was and I quote, a welcome measure raising much-needed additional funding for public services. Income tax accounts for around 30 per cent of the Scottish budget, providing vital revenue for key public services such as our NHS. We have used our limited powers over taxation to support those in society who need it most, and this year is no exception. While the Government delivers on its commitment to certainty and stability, the UK Government is, and perhaps this is an understatement in a state of chaos, presiding over the most severe cost of living crisis in a generation, the UK Government's autumn budget offered little respect from that, instead announcing at a height to national insurance that even the chancellor is trying to distance himself from. The decision to increase national insurance while reducing the lifeline universal credit uplift in October, despite our representations, is yet another hammer blow to families across Scotland. The people of Scotland deserve better than this. In direct contrast to the UK Government, the Scottish budget has set out a range of ambitious actions within our limited resources to support households and reduce inequalities. From investing £197 million to doubling the game-changing Scottish child payment from April this year to committing more than £831 million towards the delivery of more affordable and social housing, it is a budget that delivers for the people of Scotland. In addition, under the plans that we are putting before Parliament today, the majority of Scottish taxpayers will pay less income tax than they would elsewhere in the UK for the fifth consecutive year. All of that at a time when Scotland's block grant faces a cut in day-to-day funding for each year of the spending review compared to 2021-22, in addition to the continuing impacts of Covid-19 and Brexit. In practical terms, between 2021-22 and 2022-23, resource funding is 7.1 per cent less in real terms. However, despite those funding challenges, the Scottish Government remains committed to a fairer and more progressive approach to taxation, raising additional revenue for public services and supporting those on low incomes. Our income tax policy for this coming year delivers on that commitment. As the minister has rightly reminded us, it is the convention of this Parliament through standing orders that a rates resolution must be agreed before stage 3 of the budget process. Although political parties will inevitably have very different views about tax policy, there is, of course, the restraining order that is upon us, which means that if we voted against the rates resolution, we are in effect preventing tax from being collected with the uncertainty that that would create for taxpayers themselves and, obviously, for people who are working on payroll for the next financial year. I am sure that we can all agree, particularly this year, given all the challenges of Covid, that that would be irresponsible in terms of creating greater instability and uncertainty. I put on record that we will certainly not oppose the rates resolution bill, even if we have very different views from the Scottish Government about tax policy. In recent weeks, the Parliament has witnessed several debates, whether that is in the chamber or in committee, about the economic priorities that will be required as we continue our efforts to emerge from the pandemic. Despite the different tax policies of the different political parties, I think that we are agreed on what the objective should be, namely to improve Scotland's productivity, its labour market flexibilities, especially in relating to the skills gap and retraining and in terms of pursuing economic growth, although I am not entirely sure that the Greens share that particular agenda, but we will see. We are very keen that Scotland remains attractive for investment, which is why we do not want to see Scotland as the highest tax part of the UK since it not only creates disincentives for business but also for families who want to work and live in Scotland. We were very pleased to hear on 9 December that the cabinet secretary confirmed in her budget statement that the income tax rates for 2022-23 will remain unchanged, although we were much less pleased about the adjustment to basic rate bans, which has obviously put 68,000 people into paying more tax. We believe on the benches that we need to be extremely careful about any policy that will lead to some divergence. Here is why. I refer to the finance committee's report on the budget scrutiny, which we have debated several times in recent weeks, which concludes that Scotland's economic underperformance is, I quote, deeply worrying. That is because the official forecast for the impact of low wages for poor productivity, which obviously feeds lower wages, weak investment and changing demographics are having a downward impact on income tax receipts, which will come at the same time as Scotland's welfare burden is increasing and, of course, with rising inflation worries. The Scottish Fiscal Commission shows us that, for the medium term at least, income tax revenues are not increasing sufficiently fast, as they would have done if income tax had remained aligned to UK rates. In other words, the greater we have the tax powers in this place and higher tax rates, they are not being accompanied, certainly not as yet, and certainly not by the Fiscal Commission's forecast by the increased tax revenues that Scotland so desperately needs. We also know, of course—we have said this, I do not know how many times in the past few weeks—but what is extremely worrying is the net financial gap of the £190 million shortfall that we have, and of course the prediction is that that is rising possibly to £417 million in four years' time. I really do think that those are very serious statistics. Yes, if I have time, do I? I wonder if the member would accept, though, that if we hadn't raised tax, then we would be in an even worse position. Liz Smith, no, I do not accept that, Mr Mason, and I do not really think that that is borne out by a lot of the economic forecasts, because there are serious issues about the amount of revenue that we are effectively not getting in because of the tax policies of the current Scottish Government, so I do not really think that that stands up in terms of the information that we have had in front of us. In my last comment, I just want to say something about the fiscal framework, which John Swinney signed in 2016, along with the UK Government. The cabinet secretary will no doubt have to sign the new one with Simon Clark in due course. The committee rightly sets out that there are very important issues to be debated in that. Although we will have very different views about borrowing powers, I think that there is some agreement on some of the issues that we can make progress on, and we look forward to hearing more from the cabinet secretary who knows meeting her counterparts very shortly. The finance committee report was both comprehensive and very hard-hitting, and it gives this Parliament a lot to think about. In the meantime, there is the legislative requirement to pass the rates resolution. I now call on Daniel Johnson, who is joining us remotely around six minutes. In some ways, in a similar regard to Liz Smith, I would reflect that this is an odd debate, but it is a very important one. Although it may be a little hypocritical for me sitting at home to remark on the lack of people sitting in the chamber, it is perhaps a regret that there is no more interest in that. Although it may be a technical requirement, I think that matters of taxation are hugely important, and we give more discussion of those matters rather than less. Let me also start by some points of agreement. I think that the Scottish Government is correct to essentially leave fundamentally the rates unchanged and to raise the thresholds in line with inflation, therefore alleviating the so-called fiscal drag. At a time when we are seeking to both build recovery and alleviate economic damage, I think that it would be wrong to increase levels of taxation, which stands in sharp contrast with the approach of the UK Conservative Government, which is, of course, planning to introduce a national insurance rate rise that will apply to absolutely everybody in the most regressive and cruel fashion, whereas the Labour Party has been proposing a windfall tax against utilities, which would be used directly to alleviate the cost of living crisis in terms of rising utility bills and other costs. In some ways, I would gently point to Liz Smith that her points around the Scottish Government policies stand in sharp contrast to the actions of its own Government at a UK level. However, more importantly, we need to look at the detail of that, not least because of the implications of the comprehensive spending review that we will have in years 2 and 3, where fiscal plans will be under a lot greater pressure, and the Scottish Fiscal Commission's insights on income tax growth in recent months. Perhaps before doing so, it is important to look at the detail of what the Scottish Government has done with income tax, because, while I broadly support its progressive approach, I would point out that not every impact of the levels is progressive, nor do those issues go as far as they could. If you look at the impacts of the rises, those earning under £25,000 will pay just 65 per cent less tax in 2023 compared to the previous year, whereas those earning £25,000 or more will be paying £4.57 less. That is not a progressive impact. More importantly, if we are to measure ourselves by the standards of the UK Government, in essence, what the levels and rates in Scotland do is only marginally more progressive, with those earning less than £27,850 a year, paying just £21 less tax in Scotland compared to the rest of the UK. Indeed, that inflection point is incredibly low. I do not think that £27,850 is a point at which you suddenly become a rich person. The fact that, in Scotland, if you earn above that level, you are paying more tax is something that we need more consideration of. We also need to think quite carefully about whether we could use other tax powers, such as the ability to create new levies that might promote behaviour change such as the regard to net zero. More important, and echoing perhaps some of the insights but not the prescriptions that the Smith just made, we need to look at the longer-term trends highlighted by the Scottish Fish Commission. We have in many regards higher rates of taxation, certainly for higher earners, but we have lower revenues. We are raising £190 million less to our income tax measures than we would if income tax had not been devolved, because we have grown our tax base more slowly than the rest of the UK. While the explanations from the Scottish Government point to oil and gas and the south-east, that does not explain the whole picture. Virtually every Scottish region underperformed every other UK region and certainly underperformed the UK average, both in terms of growth of earnings and number of employees in the economy. Indeed, the expansion of oil and gas does not bear much scrutiny either, but east of Scotland was the second worst-performing region in the whole of the UK, a region that is largely unaffected by oil and gas change. Indeed, many of the things that we point to success for the south-east in terms of financial services and tech sectors are just as prevalent in Edinburgh as in the south-east, and yet it is an area where we are lagging. I do not pretend that I have the answers, but those are serious issues that need serious examination. We also need to look at workforce participation that is occurring at a time of labour shortages. Again, we have the supply side levers in terms of skills, education policy, so we should at least be able to outperform the UK average, even if we cannot necessarily outperform every single region of the UK. Those are long-term trends. We need strategic and sustained intervention. We need to acknowledge the relatively limited steps that have been taken to date, and we need to also look at the impacts that they have had. Ultimately, we need to talk much more about tax, both about how we raise it, but also, more importantly, how we grow wages and grow, in turn, the tax revenue that we can generate so that we can invest in public services. Thank you, Deputy Presiding Officer. Thank you. I now call on Alex Cole-Hamilton around four minutes please, Mr Cole-Hamilton. Thank you very much, Deputy Presiding Officer. This time last year, the rate resolution was passed against the backdrop of a country coming out of a second lockdown. Many millions remained on furlough. The scale of public boring and critical boring were so colossal that tax increases would have been quickly consumed. Thankfully, of course, we are in a significantly better position now than we were then in respect of the virus. However, the personal finances of many people are no less precarious now than they were then. The cost of living in crisis hangs heavy over this debate. Energy prices, food prices and rail prices are already being squeezed from left, right and centre. The inflation forecasts, the national insurance hike and the potential 50 per cent energy cap uplift, mean that we know that there is more pain to come. It is why it is important that the income tax system provides stability at this time. We do not propose substantial changes to the rates and bans of Scottish income tax. Over the course of this Parliament, there should be appropriate and affordable indexation of the thresholds. Systems need time to bed in. I think that there is a lot to be said for allowing alterations to the tax regime to properly take hold or to take effect so that behavioural change can be properly measured. The disruptive impact of the pandemic has made that picture all the murkier. However, it would be remiss not to recognise the issues surrounding income tax that this Parliament will need to navigate. We have heard something of those already. Our Parliament is maturing. We have come a long way since John Swinney as finance secretary unilaterally allowed Holyrood's tax-varying powers to lapse in 2007 and then did not tell this Parliament that he had done so until 2010. Scottish Liberal Democrats have fought hard for tax powers every step of the way, but that also means facing up to the challenges and responsibilities that come with them. That is something that cannot be avoided. We can look to the Fiscal Commission, among others, to provide clarity. The Scottish Fiscal Commission is pointing to the pressures that will come from, as it says, slightly slower growth in income tax revenue than the rest of the UK, but faster growth in social security spending. Indeed, Professor Graham Roy from the University of Glasgow summarised the problem succinctly for the finance committee of this Parliament on 14 December last year. He told members, and I quote, that, when the fiscal framework was signed up to and we agreed to have great devolution, there was an acceptance that risk would be built in around Scotland's economic performance relative to that of the UK. What has been striking is that, since that devolution of taxes, that risk has all gone in a negative way—his words—in that Scotland has been underperforming relative to the UK as a whole. What should be additional spending power for this Parliament is being offset by growth in income tax lagging behind in Scotland compared to the rest of the UK? Productivity, an ageing population, slow growth in average earnings across Scotland, more rapid growth in earnings elsewhere in the UK, underpinned by financial services. Those are all structural issues that cannot be resolved by altering the income tax rates and bans before us today, but how those rates and bans to live up for Scotland will be traced back to how this Government and this Parliament respond to those structural issues. Thank you. We will now move to the open debate. I call Michelle Thomson to be followed by Tess White. Up to four minutes, please, Ms Thomson. Thank you, Presiding Officer, and I will keep up the brisk pace of this debate. Given the multiple shocks to the economy from Brexit, the pandemics, spiralling energy costs and the impending rise in national insurance rates imposed by the UK Government, I welcome the fact that the cabinet secretary has not added another shock to her system. She has produced proposals that bring a degree of welcome stability by only increasing the starter and basic rate bans by inflation. One of the significant and constant challenges is the instability of forecasts. Since the Scottish Fiscal Commission's last forecast in August 2021, its forecast of income tax revenues for 2022-23 has changed by £400 million. That, in the short run, there can be such a significant change in forecasts should make us wary of laying too much store on longer-term forecasts. I have in the past pointed out that forecasting, including from the OBR and UK Treasury, is far from an exact science and, in turbulent times, when behaviours at the level of individuals and businesses can change quickly, forecasting models can often be subjected to considerable error. My main message is therefore that we must be particularly vigilant on actual outcomes rather than invest too much faith in forecasts. One of the weaknesses that we face, however, is that too much of the tax base overall is not under the control of the Scottish Government. As Paul Johnson of the Institute of Fiscal Studies put it in the times on December 20 last year, we know from the experience of Scotland and Wales that income tax can be at least partially devolved as a constant duty on property transactions. He goes on, There is no reason in principle why a slew of other taxis shouldn't eventually be devolved to all three nations. Indeed, as the chair of the Independent Fiscal Commission for Northern Ireland, he's argued for the devolution of corporation tax, something that I know some members of this Parliament have argued for. At a time of public health challenges, we too should reflect on his independent view of another area of tax. He argues again in a quote, The devolved Governments have responsibility for public health but cannot alter duties on alcohol. That's one reason why Scotland was forced down the route of a minimum unit price for alcohol, increasing the profits of those selling alcohol rather than increasing tax revenues. In the here and in the now, the cabinet secretary does not have the type of flexibility that would allow her to use a wide range of tax powers. Given the constraints and challenges of our times, I fully support the Scottish Government's proposals and tax as strongly as I disagree with the UK Government's national insurance hike. As my colleague Liz Smith mentioned in her opening remarks, the Scottish Conservatives will not oppose the rate resolution ahead of the stage 3 proceedings for the budget bill. It's a procedural necessity, which means that income tax can continue to be collected in Scotland. We are a party of lower taxation, but we equally recognise the uncertain fiscal situation created by the pandemic. Funding the economic recovery must come first. At first glance, the finance secretary's commitment to freezing income tax rates for the year ahead is a welcome one, especially after the SNP outrageously uturned on its own manifesto pledge to freeze the basic rate of income tax in the previous parliamentary session. A uturn, let's not forget, that both the First Minister and the Deputy First Minister insisted would not happen. However, the SNP Green Government's failure to adjust the higher rate threshold according to inflation means that thousands of Scots still face a defacto tax hike. To the tune, I've only just started. Presiding Officer, the income tax freeze doesn't detract from the fact that Scotland is still the highest taxed part of the UK. The Scottish higher rate threshold may have been maintained at £43,662, but this is still significantly lower than the UK higher rate threshold of £50,270. Those in Scotland earning more than £27,850 will pay more in income tax in the year ahead than if they lived elsewhere in the UK. That means that hundreds of thousands of workers in Scotland doing the same job and earning the same wage have less money to spend than their counterparts in England, Wales and Northern Ireland. I will take an intervention. I'm very grateful for the member giving way. That comes down to a fundamental political difference. She states that Scotland is the highest taxed part of the UK, but 54 per cent of income tax payers in Scotland will pay less tax than if they lived elsewhere in the UK, but she also recognises that people living in Scotland are entitled to a range of benefits such as free prescriptions and new university tuition fees that are not available to people living in England. I've actually said, I'll repeat, that those in Scotland earning more than £27,850 will pay more in income tax in the year ahead than if they lived elsewhere in the UK. The SNP says that its tax system is the fairest in the UK. Our teachers, nurses and police officers might take a different view. We want Scotland to be a competitive place to live, work and do business, especially as we begin to emerge from the pandemic and focus on economic growth. Divergence in tax regime cannot become a deterrent. We know for example that the UK Government has had to compensate more than 14,000 armed forces troops posted or based in Scotland, otherwise they would have taken an effective pay cut. I know from my own experience in HR and industry that organisations will be reluctant to inflict a less favourable tax regime on their staff, and that's more important than the other things mentioned. The reality is that more tax powers and higher tax rates are bringing Hollywood lower revenues. That's the view of the Scottish Fiscal Commission and it's one that we must take seriously. Yesterday, the First Minister pointed to further evidence that the threat from Covid-19 is receding. As we emerge from the pandemic, we must address the reasons why Scotland is lagging behind almost all other areas of the rest of the UK in key indicators of economic performance, as the Finance and Public Administration Committee highlights in its budget scrutiny report. Low growth in Scottish earnings, productivity, boosting labour force participation for young people, adequate skills and training to meet the challenges and opportunities of the future are all issues that must consume our time and energy as policy makers during this parliamentary term. I call on Ross Greer. I quite like talking about taxation policy. The annual budget process is usually either my favourite part or the bit that I really can't stand. It's my favourite part of the years that we have a substantial discussion about taxation policy, but on the years that we simply rehash chunks of the stage 1 debate this afternoon, it's usually quite frustrating. I think that today we have actually aired on the side of a substantial discussion about tax 1 that I welcome. There are some points about this year's income tax rates, which I've made before and that I want to make again, but before getting to that, there's a wider point that I'd like to make. I can't be the only one who's frustrated by the familiar pattern of budget debates overall in this Parliament. The overwhelming majority of our time is spent discussing, scrutinising and critiquing the spending proposals, with very little regard paid in most years to what we discuss as part of the rates resolution package. Opposition parties quite legitimately want to see more money spent on the areas that they prioritise. In last week's debate, the Conservatives proposed changes that, by my rough estimates, would have cost at least £0.5 billion and the Labour parties came to more than £1 billion. Liz Smith, I'm grateful to Ross Greer. Given what he's saying about the importance of this kind of debate, even if not many people would seem to be attending the debate this afternoon, would he consider that a finance bill alongside a budget bill might be an advantage to this Parliament so that we can engage in greater scrutiny? I'm grateful for the interventions, because I think that that's an interesting proposal. I think that it's one that the Finance Committee should look into before making proposals about long-term reforms to the budget process. Going back to the issue of where we've been in the past few years, I don't think that we've been having a particularly informed public debate. It lets the Government off the hook. It's easy to dismiss Opposition proposals as lacking credibility when those proposals lack credibility. That wasn't the case every year in the last session. Ahead of the 2018-19 budget, there was a collective understanding that a serious discussion about income tax was due, given its recent devolution. All five parties were offered the same opportunity at that point. We could submit a set of income tax proposals, and the Fiscal Commission would project how much they were likely to raise. For memory, I believe that four out of the five parties in that place took up that opportunity. I think that the budget debates that year were all the better for it. Income tax isn't the only revenue raising mechanism at the Scottish Government's disposal, so they weren't comprehensive taxation proposals that each party was coming out with. However, they added a level of depth and credibility to the debate, which has been missing in recent years. The Greens certainly found it helpful in our budget negotiations to have a set of figures in front of us that supported our proposals for additional spending on local government in particular, rather than the imbalance of power that exists when only the Government has access to key bits of information during the budget process. I welcome the finance secretary's positive response yesterday to my proposal that a similar opportunity be afforded to every party on an annual basis or wherever we set the budget if we move to multi-year budgeting. I don't think that it's an unreasonable expectation for all of us to set out both our spending and our taxation policies at budget time. It would at least be much more interesting than the often tedious and repetitive routines that I think we've all found ourselves in. It would nullify the claims that a fully costed proposal is one where we've worked out the price tag but made no effort whatsoever to explain where the money would come from. I'm quite sure that various combinations of parties would in any given year not necessarily want to make any changes to existing tax policies, but if those same parties are then proposing additional spending, the onus will be even more clearly on them to explain where else they would cut spending from to fund those proposals. I think that that is something that would aid both Government and Opposition. It would challenge all of us to make best use of this Parliament's powers to deliver for the people who elected us. I welcome thoughts from colleagues across all parties on that proposal. Before closing my own contribution, I welcome today's rates resolution, particularly the freezing of the upper bands, which will raise another £106 million for our public services. Given the pressure on public services and the substantial cut to our budget by the UK Government, that additional money will certainly be put to good use. For now, the Greens support the rates resolution proposed by the minister this afternoon. Thank you. We now move to closing speeches. I call on Paul Sweeney up to six minutes, please. Thank you, Presiding Officer. As always, I'm pleased to be closing this important debate on the Scottish income tax rate resolution for the financial year 2022-23. As was the case last year, the debate does come at a slightly unusual time in the budget process, but I appreciate and understand why the Government has done this, and welcome the certainty that it will bring to families and businesses as we move forward. Labour will not oppose tonight's rate resolution, but I would caution the Government against taking that as Labour wholly endorsing the budget proposals or indeed the income tax proposals contained in the resolution. We have concerns about the rates, particularly the disproportionate impact that it will have on lower earners compared with higher earners. According to the Scottish Parliament's own information service, those earning under £25,000 a year will only pay 65 pence less tax in 2022-23 compared with last year. In contrast, those earning above £25,000 will pay £4.57 pence less compared with last year. As Daniel Johnson pointed out, the inflection point here is around £28,000, so even for those who earn under that specific threshold of £27,850, they will not be making a saving annually of £21 a year relative to the income tax rates in the rest of the UK, so a very marginal actual saving and a pretty inconsequential one, given the alarming rise in the cost of living across the UK. Therefore, the claim that somehow Scotland is the most progressive tax part of the UK is a very marginal claim, while technically true in meaningful terms, it does not really make much of an impact on the average household. We are facing this cost-of-living crisis, and with the price of necessities, like energy, food and petrol rising across the boards, inflation looks on course to hit 6 per cent over the year. Of course, that brings with it the prospect of the Muncher Policy Committee at the Bank of England increasing interest rates. Therefore, it also seems rather bizarre in that context for Conservatives to be griping about Scotland being the highest tax part of the UK when their colleagues in government and the UK level are proposing to hike national insurance contributions, which are regressive and will disproportionately hammer those on the lowest incomes. I am happy to give way. I do not doubt for a minute that there are serious issues about the cost of living, and that includes the potential for increasing national insurance, which I think is a big concern. Does he recognise, however, that these national insurance rises are very much dedicated to helping the health and social care budgets following the pandemic to which most parties agreed? Paul Sweeney. I know the fiscal effects that the pandemic has had. However, I recall the election campaign that was fought in 2019 committing to investing in social services being improved to improving the national health service and providing a care service that was fit for purpose without any commitment to raise taxes. It was going to be funded through borrowing, and with borrowing at such low rates, it is actually negligible rates of interest. It seems like a very worthwhile investment rather than hammering the lowest-income households. Therefore, it is a ffiscally regressive policy and one that I regard as indefensible. On that basis, it is fair that the Government of Scotland is choosing to keep rates broadly in line with where it was last year, but it should not preclude us from having a serious conversation across civic Scotland about how we view taxation and the priorities for the next few years. It is evident from the Fiscal Commission's December update that there are several challenges facing the Scottish economy, but the most pertinent of those is the likelihood of a £190 million black hole in income tax revenues in the coming financial year and a potential £417 million funding gap in the financial year of 26-27. While we accept that right now in the midst of a pandemic and the cost of living crisis, it may not be the time to have a full and frank conversation about tax rates more generally, we will need to do that in the near future, before that potential funding gap hits us. We already see the impact of timid tax policies and an ambitious Government fiscal policy. It leads to a £250 million cut to local authority budgets in the coming financial year, cuts to skills and education budgets and our curtailing of investment in public services and infrastructure. We need to have that mature conversation in the coming months and years. The Government promised to replace the regressive and inefficient council tax in 2007, but it is now encouraging the use of council tax-raising powers to offset its own disproportionate cuts imposed on local authorities. The people who are suffering most and all of that are our constituents, many of whom are vulnerable and unsure of how they will navigate the next few years. Those income tax proposals will do very little to alleviate their concerns, and I urge the Government to bring forward proposals on how we can shift the tax burden away from hard-working families and towards multinational corporations, the top 1 per cent of earners and the owners of large rent-seeking assets such as land, and looking towards the future technological disruptions as well with the transition to electric highways, the move away from internal combustion engines and petrol, and the development of local heat networks, which move utility ownership to a more local level. Today is not necessarily the time or place for those detailed discussions, but it is clear that timid and income-centric policies will not result in the revenue required to see Scotland prosper, so it is a conversation that needs to be had. For the purposes of today, Labour will not oppose the resolution, but I urge the Government to avoid taking this as any kind of endorsement of their policies more generally. Last year, my colleague Maurice Golden closed the same debate for the Conservative Party. In that debate, he commented that there are usually two certainties within a Scottish budget, taxes going up and a pantomine from the Greens pretending that they might not support it. Last year, he was pleased that one of those traditions was broken. This year, I am pleased to see that the other one has also been broken. No longer are the Greens a pantomine, but instead they have been fully brought into the circus of this devolved Government, selling local government down the river for a couple of ministerial diesel cars. Colleagues, as has already been said many times in this debate this afternoon, the fact that hard-working middle-income Scots pay more tax than the rest of the UK is a disgrace. Why should our nurses, teachers, public servants and many more be penalised because of this devolved SNP-Green Government? However, the most disgraceful fact of all this, extra tax or vital workers are paying is for nothing—no benefit at all for the Scottish budget. At the Finance Committee on 14 December, Professor Alistair Smith of the Scottish Fiscal Commission told us that if Scottish income tax had not been devolved, tax payers would be better off by £800 million in 2022-23. John Mason said that when income tax had not been devolved, but if we had not put the rates at what they were, he would accept that there would be less money. We would have less money for public services, we would have to cut public services. I am tackling this point, Mr Mason, that the whole point is that if the tax had not been devolved, we would—our tax payers—would have £800 million back in their pockets. That is a point not made by myself but made by Professor Alistair Smith. £800 million back in the pockets of hard-working tax payers, back in our economy and back to be spent in our high streets. Tomorrow we will have Labour's cost of living debate. Think how much better it would be to have that money back out with families right across Scotland. Before anyone says that that £800 million is more for the Scottish Government to spend, I am afraid to report back that that is not the case. Because our economic performance is lagging behind the rest of the UK, that extra taxation is just to plug the gap in our economic divergence. That is a point that Alex Cole-Hamilton pointed out in his contribution. To be fair, that is not the fault of devolved taxation, that is the fault of the devolved SNP Government in its economic incompetence. The SNP gambled that the Scottish economy would grow faster than the rest of the UK. The SNP gambled that oil and gas would play a pivotal role in economic growth, but then it got in bed with the Greens. The First Minister went for some selfies at COP and she turned her back on the oil and gas industry in the northeast. The SNP gambled with millions of taxpayers, hard, earned, cash and lost. In 2016, Nicola Sturgeon said, I have been very clear that the Government will not increase income tax rates. At the time of rising inflation and pressure on household incomes, especially low incomes, that would not be the right thing to do. Yet middle income taxpayers right across Scotland are paying more, much, much more. A couple of the contributions that we have heard today from the minister he said that he has been talking to businesses and that he wants to hear certainty and stability. I hope that the minister can listen to them, and maybe the threat of another divisive referendum will be taken off the table to give businesses that certainty that they deserve. Mr Lumsden, you are within your last five seconds, so you would like to conclude. So what the Government should be doing is focusing on investing in our local government and preventative measures that they are forefront of delivering. They should be investing in infrastructure and not making cuts. They should be protecting the energy industry and helping them to make the transition to renewable energy. They should be levelling up and not levelling down. The SNP Green Government should be focused on growing our economy. Instead, we should address and drive in our way talent, jobs and investment, all things that post-pandemic would desperately need in Scotland. I now call on Tom Arthur to wind up the debate up to five minutes, please minister. I want to initially begin by thanking members for their contributions. I note that several members commented on the substance and the tenor of the debate, in that it was a matured debate. I am always perhaps conscious as an MSP taking part in any debate that there is an inverse relationship between the substance of the debate and its appeal to sketch writers. I commend Mr Lumsden for trying to give him something to write about, but I just want to turn very briefly to Mr Lumsden's remarks, because I think that we need a mature debate. I think that one of the places that we have to start is what the definition of a middle income earner is. The majority of people paying income tax in Scotland—I will certainly give way. If he wants to give me the precise definition in the conservative perspective of what a middle income earner is, I will happily give way. On that point, he surely thinks that teachers and nurses are hiring earners, because they are paying more tax under the devolved tax. Does the member want another bite of the tree? Give me a number. What is the salary of a middle income earner in Scotland? Once again, we hear that teachers—do you think that they are hiring rate taxpayers? We will have nurses all paying more tax under this devolved Government. Is not it revealing, how out of touch the Conservative Party are, when the reality is that the vast majority—54 per cent—of people in Scotland who pay income tax will be paying less income tax than they would elsewhere in the UK, and teachers, nurses and doctors, unlike their UK counterparts, are not saddled with tens of thousands of student loan debt? In all seriousness, a range of points were made in the debate, and one that many members kept on coming back to was the issue of SFC forecasts. If we are time or to allow, I would be more unhappy to address some of the other points that members have raised. However, I think that this is the central one, and I think that we are absolutely right to express concerns around the SFC's latest income tax forecasts. Those are, first of all—it is important to remember—independent forecasts, and it is of course the case that the SFC is the best place to explain their judgment in detail. However, I would like to highlight a number of important factors that members should be aware of. Both the SFC and the OBR have previously warned that the continued uncertainty around the pandemic means that there is a significant risk that we will see greater volatility in their forecasts, which was something that Michelle Thompson picked up on. Furthermore, the negative net position forecast for income tax is partly driven by different judgments, taken by the SFC and the OBR on the outlook for the Scottish and UK economies. The OBR's forecast of the UK income tax receipts also includes the effects of the UK Government's decision to freeze UK income tax bans until 2025-26, whereas the SFC assumes that Scottish income tax bans will increase in line with inflation. The minister is quoting the Scottish Fiscal Commission and we could go on to Fraser Vallander and various other economic forecasters, but the Parliament's own finance committee described, and I quote, as deeply worrying, the economic under-performance. That is the biggest concern, and that is surely some of the issues that the Scottish Government has to address. It is important to look at the reality of the Scottish Government's economic performance and its performance under this Government. Our GDP is now back to pre-pandemic levels, and we have seen that that was broad based from the latest statistics. Indeed, in December, the Scottish Fiscal Commission forecast the Scottish economy to grow 6.7 per cent in 2021 and 3.8 per cent in 2022. If we look at the labour market, Scotland's unemployment rate of 3.6 per cent is lower than the latest UK data. If we look at trade, for example, Scotland is the only part of the UK with a positive trade balancing goods, exporting 4 billion more goods than it imported over the last year. If we look at foreign direct investment, Scotland has been the top destination in the UK for foreign direct investment outside London for the past six years, with Edinburgh, Glasgow and Aberdeen appearing in the top 10 UK cities. On productivity, we have made tremendous progress since this Government came to power and narrowing the productivity gap between Scotland and the rest of the UK. We will build on that work through the national strategy for economic transformation. I may recognise what we have from the SFC, our forecasts and their volatile, but, of course, we take them seriously and we are working constructively with business and with other partners to build Scotland's recovery from the pandemic and ensure that we have that growth, which translates into earnings and increased income tax receipts in the future. That concludes the debate on Scottish income tax rate resolution 2022-23. We will now move on to the question on the motion. Rule 11.3.1 requires the question on the Scottish income tax rate resolution 2022-23 to be put immediately after the debate. The question, therefore, is that motion 3019, in the name of Kate Forbes, on the Scottish income tax rate resolution 2022-23 be agreed. Are we all agreed? Yes. The Parliament is not agreed, therefore, we suspend to allow access to the digital voting system.