 If you two are finished, the next item of business is a debate on motion 15879, in the name of Derek Mackay on the Scottish rate resolution. May I ask those who wish to speak in the debate to press a request to speak buttons, and I call on Kate Forbes to speak to and move the motion for 12 minutes, please, minister. Thank you, Presiding Officer. Today, the Scottish Parliament votes to set all rates and bans for Scottish income tax, as we use the powers of this Parliament to build a fairer, more prosperous country. This is our opportunity to show our commitment to fund essential public services to invest in our economy and to care for those most in need. Parliament should also be aware that the Cabinet Secretary for Finance, Economy and Fair Work has written to the Presiding Officer about the procedural connection between the motion for the Scottish rate resolution and the budget bill. The effect of rule 9.16.7 of the standing orders means that stage 3 of the bill cannot begin until the Scottish rate resolution motion is agreed by Parliament. That is an important day. As a Parliament, we will set income tax rates for 1920 and forecast to raise more than £11.5 billion to support the best outcomes for the people of Scotland. In the Scottish budget, we have taken responsible decisions to ensure that Scottish income tax is progressive and raises the revenue that is needed to support essential public services and the economy. It does so in the context of continuing UK austerity and against a backdrop of a UK Government careering towards Brexit at any cost, at the cost of our economy, at the cost of free movement of skills and talent and at the cost of our public finances. In sharp contrast to the chaos and the uncertainty of the UK Government, the Scottish Government will keep on delivering good governance for Scotland. Our income tax proposals will continue to follow the four key tests that we introduced in 2017. Our income tax policy will, firstly, protect the lowest-paid taxpayers, secondly, it will improve progressivity, thirdly, it will raise additional revenue to maintain and promote Scottish public services, and fourthly, when taken in conjunction with our spending plans, it will support the Scottish economy. The proposals before the chamber today pass those four tests. I am asking the Scottish Parliament today to agree the Scottish rate-resolution motion, which for the tax year 2019-20 will raise additional revenue to invest in public services, tackle poverty and support Scotland's economy, and will continue to protect lower- and middle-earning taxpayers, making the system fairer and more progressive happily. James Kelly. I thank the minister for taking the intervention. On the issue of tackling poverty, do you think that the tax proposals that you are putting before Parliament are fair in that 99 per cent of taxpayers will pay less tax, while there are 230,000 children in the country living in poverty? Kate Forbes. I thank the member for that question. As the member will know, our tax policies today will raise an extra £68 million to invest in public services and, critically, to tackle poverty when you look at it in conjunction with the various budget spending plans. My question to Labour is what their tax policy is this week. What would Labour's mysterious tax policy have raised in order to deal with the critical issues that this country faces? A cornerstone of the Scottish approach to taxation is certainty. In 2020, that is why we will not raise any of the rates of income tax, but we will, importantly, increase the starter and basic rate bans by inflation to protect the lowest and middle-earning taxpayers. The minister for taking an intervention. Perhaps the minister could tell us why SNP manifesto after manifesto actually did support reinstating the 50p top rate of tax, but now in this Parliament the SNP do not. Kate Forbes. We base all our decisions on evidence to ensure that we have that certainty of public revenue in order to deal with the public spending plans that we have to deal with the critical issues of poverty. We require that certainty of revenue, because creating, inventing tax rates out of the sky is not going to guarantee that guaranteed revenue. Labour has had several months to come forward to the Cabinet Secretary for Finance with its proposals and with its spending plans that have been actually costed and have failed to do so. In sharp contrast to that, our Government's policies will ensure that there is the public revenue to back up our public spending plans, and our tax policies will ensure that 55 per cent of Scottish taxpayers continue to pay less than they would have lived elsewhere in the UK. Now is not the time to pass on the UK Government's tax cuts for the highest earners. Under our proposals, the higher rate threshold will remain frozen at £43,430 in 1920, a decision that the Scottish Fiscal Commission has forecast will raise an additional £68 million for the Scottish budget next year, compared with an inflationary increase. I hear the scintillating tones of another member. Mike Rambos. Mike Rambos. Mike Rambos. Mike Rambos. Mike Rambos. Mike Rambos. Mike Rambos. Mike Rambos. Mike Rambos. Mike Rambos. Mike Rambos. Mike Rambos. Kate Forbes. Kate Forbes. I do not think that it is progressive, and that is that the Liberal Democrats are now piping up in a debate when they have had months to meaningful engage, bone create and maybe just maybe, shape the budget. It is a classic example of all talk in this chamber and absolutely no action to deliver their policies. The decisions... The decisions on tax that we have taken have enabled us to mitigate the decade-long shwun iруidol yn disigwyddiol, ond ei bwyswys dydeiadu yn gwllyg substituteshol haiğwad dramaiddon wrth ei f 뜻io ond nhai researchers llawer o unigol cyfrindig Rhag jurisdiction para fe gمكن hefyd Cymysz Wgdon ach chi gwirio cyfrindig Rhag avenueau ysgr komiant ddar chir hefyd mwy'mawr yn byteth i'w wyfntiau cyfrindig Rhag bedeul chi'w rydyn ni i dduiad i os ωdd duol yn y dri beamahau portirol hitr a gyfnodemwneon ar gyn udaon cyiatric i codi resforiad cyfrindig Rhag competency a소� inferior o rawr i vaesu gyfrindig Rhagugene o ardowing speydleniaeth cyf migrants—gweld y pryd mache fyddwyd yn 0,5 b steril, ond yn ei the social security landscape in Scotland, with the creation of a compassionate and adjust Scottish social security system with dignity, with fairness and with respect at its heart. I am confident that the income tax proposals that we have put before Parliament will deliver the best outcomes for the people and the economy of Scotland. Tax powers are not a political toy, they have an impact on individuals and on the economy. The decisions that this Government has made have to be seen in the context of the UK Government's continued pursuit of budget cuts. Scotland's discretionary resource budget allocation will be £1.9 billion lower in real terms in 1920 than it was in 2010-2011. That is a fall of 6.5 per cent. It puts a huge strain on public spending, which this budget works hard to manage. A key principle borne of Adam Smith is that taxes should be proportionate to the ability to pay. In the present context, that means that we must ensure that those that are least able to pay are not shouldering the burden of austerity. Some in this chamber are desperate to claim that our tax policy is a major risk to Scotland's economy, despite the fact that, even under the most pessimistic assumptions, our income tax policies would still raise additional revenues and our economy continues to grow. Interestingly, those same members are sitting idly by as their party at Westminster presides over at the shambles of Brexit, which all business organisations identify as the greatest threat to the Scottish economy. Unlike them, we want our decisions to be based always on the best evidence. The cabinet secretary has asked our council of economic advisers to expand their analysis of the impact of potential behavioural effects of tax policy changes and the possible impact on future revenues. I look forward to seeing their advice, which will, as always, form an important part of future budget decisions on income tax. The delivery of Scottish income tax has been a major achievement. However, as Westminster still retains control over key elements of income tax and the administration of Scottish income tax, we continue to work closely with HMRC to ensure that the devolved and reserved aspects of income tax work as smoothly as possible. The status quo is not perfect and we continue to be limited in our ability to use this tool to best effect while the administration of income tax, national insurance and income tax on dividends and savings remain within the UK Government. Notwithstanding those limitations, as income tax receipts now account for around 30 per cent of Scottish Government revenues, we continue to invest in the Scottish economy and its workforce to improve the prospects of economic and employment growth. The Scottish economy, the powerhouse that fuels ambition for Scotland, has seen positive growth in all seven quarters since the start of 2017. Our annual growth rate remains at 1.5 per cent in line with the UK rate, and unemployment in Scotland is at a record low, as stats out today prove once again. Furthermore, since 2007, Scotland's productivity growth has been faster than all other countries in regions of the UK, including London and south-east England. Our on-going investment in the economy comes at a time when Scotland's economic performance has remained resilient, despite heightened economic uncertainty, as the UK Government recklessly moves closer to crashing out of the EU. Against that backdrop, our income tax proposals start from a strong base. Since we introduced our fairer tax system, our economy has still grown in line with the UK, demonstrating that those who predicted that our tax policy would hit the economy are wrong. Future revenues for the Scottish Government will be driven both by our policy choices and by the relative growth per capita in our tax receipts. The Scottish Fiscal Commission published its latest set of independent economic and fiscal forecasts for Scotland on 12 December, where forecasts of GDP growth were revised upwards in every year. It expects the Scottish economy to grow 1.2 per cent in 2019, 1 per cent in 2020 and 2021, 1.1 per cent in 2022 and 1.2 per cent in 2023, but we will do everything in our power to exceed those forecasts. However, the commission makes clear that Brexit is a key factor that is expected to lead to slower growth in productivity, population and trade in future years. At a time of constrained growth, prolonged austerity and growing economic uncertainty, all exacerbated by the current UK Government, we are proposing to protect the lowest earning taxpayers, deliver a progressive tax system and raise additional revenue to support vital public services. I move the motion in the name of Derek Mackay. I call Marta Fraser. Eight minutes please, Mr Fraser. Thank you, Deputy Presiding Officer. After all that money that the Finance Secretary spent on improving his speaking skill, I am so disappointed that he did not get a chance to show it off in the debate this afternoon, but hopefully we will be returning to that on Thursday afternoon, Finance Secretary. However, today the Scottish Conservatives will be opposing the Scottish rate resolution. We do so because we do not believe that it is fair to burden hard-working Scots with yet more taxes to widen the income tax gap between Scotland and the rest of the UK. We will, in this debate, highlight the Scottish National Party's broken promises to the Scottish people. First of all, it is worth setting in context the decisions that the finance secretary has had to make around taxation. The block grant from Westminster is increasing in real terms from 2019-20 by £521 million, according to SPICE. That means that, despite all the rhetoric that we hear from the Scottish National Party benches about Westminster cuts, the Scottish Government has more money to spend in the coming year than in this one. Indeed, if we look at the Scottish Government's entire budget, it is up in real terms compared to when the Conservatives first came to power in Westminster in 2010. We should remember what the Scottish National Party promised the voters of Scotland at the last election. The Scottish National Party manifesto in 2016 said this, "...we will freeze the basic rate of income tax throughout the next Parliament to protect those on low and middle incomes." Nicola Sturgeon herself said in this Parliament on 2 February 2016, "...I have been very clear that this Government will not increase income tax rates." Well, it did not take long for that promise to be broken. John Mason. I thank the member very much for giving way. Would the member accept that manifestos are dependent on having a majority government and minority parties always have to negotiate the position? I say to Mr Mason that the Conservatives would have been delighted to have sat down with the SNP Government and delivered a tax policy for Scotland. That was about growing the economy and growing tax revenues, but they are more interested in talking to their friends in the Green Party than they were in having constructive discussion with us. But who knows? There is always next year, Mr Mason. We live and hope. Presiding Officer, it did not take long for the promises that were made to be broken. In last year's budget, we saw higher taxes in Scotland compared to the rest of the UK for some 45 per cent of the Scottish population breaking that manifesto pledge. In the right resolution that we see today, the SNP is going even further. Thanks to those tax changes, everyone in Scotland earning over £26,990 a year will pay more in tax than they will pay in the rest of the UK. That is not the rich, Presiding Officer. Those are not the wealthy people in society. Those are ordinary hard-working families, some with a household income of just £27,000 were being penalised by the SNP. In practical terms, that means that a police sergeant earning just over £45,000 will be nearly £700 a year worse off than their counterparts out of the border, and the principal teacher earning £51,330 more than £1,500 a year worse off. Is little wonder that we have heard concerns raised by those in business about the impact of those tax changes. The CBI in Scotland has warned that the divergence in income tax will be a major issue for companies keen to attract the best talent. The Scottish chambers of commerce have warned that it could take years to repair the damage of higher taxes. The Scottish Life Sciences Association told the First Minister in March last year that it had strong concerns about the tax increases that would damage the recruitment of highly skilled people. After stage 1 of the budget process just three weeks ago, the Federation of Small Business said that the finance secretary's budget changes would, and I quote, erode the small business community's trust. That will be behaviour change as a result of those tax increases is beyond doubt. The Scottish Fiscal Commission has predicted that Scotland will lose approximately £34 million over the next five years because people will be encouraged to leave Scotland or not come here to begin with. That may well prove to be an underestimate if the tax gap continues to grow. Just today, we have seen the Chartered Institute of Taxation warn that the 15 per cent of all Scottish taxpayers who contribute almost 60 per cent of entire total revenues could take legitimate steps to limit their tax liabilities. For example, by working fewer hours, are we putting more money into pension payments rather than taking that salary, with a detrimental impact both on the Scottish economy and on overall tax revenues? The saving of £20 a year that we have seen for the lowest paid pales in certificates against the potential additional costs that we are seeing from other tax changes in the budget. While we are talking to you about the rate resolution, we have to put that in the context of the wider tax changes that we are also seeing. Increasing the council tax cap from 3 per cent to 4.78 per cent and another broken manifesto promise from the SNP will also hit lower-income families in the pocket. Worse than that, we have the new car park tax, the workplace parking levy that could cost up to £500 a year, a regressive tax, one that is not based on the ability to pay and one that will hit the lowest earnest, the hardest. I will give way in a second. In moving this debate, the minister made the point that the tax change that is being announced today will protect the lowest paid, but those who will suffer the most from a £500 a year flat charge will be the lowest paid, many of whom have no option but to use cars as a means of getting to work. I will give way to Mr Harvey. I am grateful to Murdo Fraser for giving way. Twice now, he has used a specific figure as to what the workplace parking levy will actually cost people. Presumably, he is aware of some Scottish local authorities who have developed specific proposals and are setting out what their levy would be. Can he name those local authorities or does he just want to tie the hands of all of them to forbid them from even considering whether they might use that policy at all? Murdo Fraser. The reason why we are using that figure of £500, and Mr Harvey knows perfectly well, is that the only existing model that exists in the United Kingdom for this is in Nottingham, where the charge is £410 or £419 a year to which must be added VAT if it is charged out by employers to employees. Mr Harvey was to come forward with a suite of alternatives. We will be very happy to debate that with him and I am sure that local government will want to do too. I think that it is reasonable to proceed on the assumption that that is the sort of level that is likely to be imposed here. Of course, we already know that we have SNP-run councils, for example here in Edinburgh, who are already enthusiastically talking about this charge and the SNP leader of Edinburgh Council already saying that he wants to see that charge not paid by employers but paid by employees. The very low-paid employees, the Government says that it wants to protect, facing a flat charge of £500 a year, a regressive flat-rate tax. We know that the Scottish economy has been underperforming that of the UK as a whole. The Scottish Fiscal Commission's forecasts show that the situation will continue in each of the next four years. We see the impact of that and the income tax projections from the Fiscal Commission. A £500 million black hole at the heart of the Scottish Government's income projections for the current year. Those forecasts may prove to be incorrect, but if they are not, in two years' time there is a large gap to be filled. I could go on at great length and reiterate the point. The resolution today breaks manifesto promises from the SNP and, for that reason, the chamber should reject it. Scottish Labour will oppose the rate resolution before Parliament today. We do not favour giving tax cuts to chief executives while penalising councils and asking them to make service cuts. It is simply unfair that high earners on six-figure salaries will pay less tax while councils face the prospect of having to make workers redundant. Against the background of which the Government has brought the rate resolution forward, it has to be set the Fiscal Commission's forecasts for 2020, which show income tax forecasts down by £1 billion. Once that is fed into the block grant adjustment, that could mean £500 million less money. The main driver for that is the number of additional higher and top-rate payers, which came as a result of the HMRC out-term report. That is not a fault of the Government, but the Government needs to take account of those circumstances in taking certain tax policy, particularly when it is assessed against the situation in the country, because we continue to see big issues around poverty and inequality. There are 230,000 children in Scotland living in poverty. Many wards in the country, including in the cabinet secretary's constituency, have poverty rates running at 30 per cent. That is why charities and third sector groups favoured the raising of child benefit by £5. It was also given some support recently by Kevin Pringle, someone who is obviously respected on the SNP benches. The other factor that needs to be taken into account is the public service cuts that we are starting to see as councils begin to set their budget. We saw workers in Dundee demonstrating on the streets at the weekend. That is because the council is looking at proposals and education alone to cut school budgets by 3 per cent, which could result in the reduction of 26 teaching posts. It does not say much for the Government's commitment around education. In Aberdeenshire, there are proposed cuts to schools and libraries with a potential loss of 150 positions. In Clackmannanshire, the support to the Citizens Advice Bureau faces the threat of being cut altogether. Against that backdrop, the tax policy brought forward from the SNP Government is simply unfair. Kate Forbes, I thank the member for taking intervention. In order to fund all those additional asks, how much would the higher-rate tax rate have to be increased by to fund those? James Kelly Specifically what the SNP Government should be doing is charging top-rate payers 50 pence. In addition to that, in the higher-rate band of between £43,430 to £150,000, that band is too wide and there should be additional tax raised in that band, which would raise significant amounts of money, which would mitigate the council cuts that have been outlining in addition to tackling child poverty. The reality is that the SNP Government has made a choice to introduce a tax cuts budget that will favour 99 per cent of taxpayers, but at the same time continuing to penalise local councils and lacking the ambition to tackle child poverty. I am grateful. Mr Kelly knows that a large bulk of the tax cuts that he is talking about result from changes to the personal allowance, which is a UK change. Can he remind us how Labour voted on that, and did it argue against that change to the personal allowance, or did it vote for it in the same way that it voted for the cuts at the higher-rate? We made our position in Scotland absolutely clear in relation to that, as we will make our position clear in voting against a tax policy this evening that lacks ambition. There has been a lot of commentary and coverage about coming up for the 20-year anniversary of devolution. If you had to go back to 1999 and you said to someone, seeing 20 years' time, the Scottish Parliament is going to be setting a tax rate that is going to result in tax cuts for bankers and bears then, lawyers in Lossymouth or chartered accountants in Canustee. At the same time, if you were a pool attendant in a local leisure centre, the leisure centre might not only be closing, but it might be out of a job. People would not have believed that. They would have said, the Tories must be in power then, but that is coming forward from a supposed progressive SNP Government. It is simply not good enough. The reality is that the cuts passing on austerity will also blunt economic growth. We saw from analysis published yesterday that there have been 417 million cuts to university education. We need to invest in education and universities if we are going to produce the appropriate graduates with skills that are going to make a contribution to grow the Scottish economy. I am sorry, I am running out of time. Labour will not support a rate resolution that puts more money in the pockets of high learners and poses a threat of P45s to council workers. We need a plan that positively uses the powers of devolution to stop the cuts and to tackle child poverty. The plan that has been put forward by the SNP Government lacks ambition and misses a chance to help many people and communities in the country and it should be rejected. I rise with mixed feelings because I see a rate resolution that, while it is certainly not perfect, is a great deal better than James Kelly, for example, gave it credit for. What we are seeing is not a rate resolution that itself includes cuts for the high learners. Those cuts for the high learners are the result of UK policies. What we are seeing is a rate resolution that could do better. In 2016, the Greens were the only party in that election to put forward creative proposals for the use of new devolved income tax powers, not refusing to act but also not hiking tax for low learners, finding ways to show that it is possible to raise revenue while cutting inequality at the same time. It did take us another year and a half or so after that election of consistently making the case before the Scottish Government accepted that this is what should be done. The shift last year to a five-band system absolutely was the right move. It is underpinned by the right priorities, as well as the goals of raising revenue, protecting low-earners, cutting inequality and so on. I am pleased to see that that has been implemented last year. I am pleased to see that it has proved to be more popular than I think the Scottish Government thought it might be. In fact, I was even pleased to see that the Scottish Government picked up a gong at the Public Service Awards late last year for innovation, for the way that it developed this new policy with rigorous analysis, with open, participative public engagement and civic engagement. That is the way that we should do those things. Patrick Harvie for taking an intervention, but I would like to ask him if he is pleased to see 230 million cuts to local government. I am pleased that we have done what we could to prevent cuts to local government. I only wish that every political party in this place was putting forward positive, well-worked-up, costed proposals and seeking improvements to the Scottish budget. If we all did that, the result would be better than we have managed to achieve on our own. I am sorry, but I need to move on. That open, participative approach to setting tax policy contrasts with the shallow rhetoric that we often hear from the Conservatives who want to portray Scotland as the highest tax part of the UK. Sometimes, Derek Mackay has replied by saying that we are the lowest tax part of the UK. The reality is that we are both with the lowest tax part of the UK for low earners and the highest tax part for high earners. That is as it should be. If Fraser wants to intervene at that point, I would be happy to let him in. I will move on a little bit for the point that I was going to make, but let me ask that if I can. When Mr Harvie negotiated the extra £90 million for local government, was he aware that another £54 million that he could have had that Mr Mackay was keeping quiet about? Patrick Harvie. We have had that out at the finance committee. I do not think that anything has been kept quiet about, but the very clear commitment to fund the teacher pay settlement is something that I believe the Scottish Conservatives even ought to welcome. They know that we need that pay settlement to attract the teachers that we need. It is regrettable that, after the progress that we made last year, the Scottish Government still resists the case for building on that progress and going further. Especially in the context of that UK change that I mentioned to James Kelly, the uplift in the personal allowance. Once again, there are always still people who say that we have lifted more people out of taxation altogether by raising the personal allowance. The personal allowance increases that we have seen are not a progressive measure. The bulk of what that policy costs goes to high-income households. It achieves nothing at all for the lowest earners, because the lowest earners are already below where the threshold was. Those increases in the personal allowance are not positive. It would have been possible for the Scottish Government to recoup that not from everybody but from high earners, so that we do not see that tax cut benefiting those who need it the least, if it is very brief. Mike Rumbles Are you voting for this evening or are you abstaining? We have made it clear already when we reached an agreement with the Scottish Government on the budget that we would abstain on the rate resolution, because we do not believe that it goes far enough, but we are not willing to put at risk the wider achievements that we have made on amendments to the budget, which would fall if the rate resolution falls. Look, the tax gap that the Conservatives are concerned about and the tax cuts at the top end that the Labour Party is concerned about, and that I oppose as well, are the result of UK policies. As indeed is the national insurance anomaly. National insurance is not a progressive means of funding public services or the social security system. Its tax base is income, but its tax rate goes down when income goes up. It is an absurd notion, and the idea that there will be no anomalies when that regressive system of national insurance remains reserved but a progressive approach to income tax is devolved, the idea that there will be no anomalies is not achievable. We have a more progressive approach in Scotland. I wish that the Scottish Government was going further to build on that, to boost the budget further and further a decrease in equality. However, I will abstain to allow this rate resolution to go through, and I will continue to make the case for a wider context of creative, innovative approaches to taxation on wealth as well as income, on consumption as well as production and at national as well as local level. All of those are needed. I read this morning in my Dundee courier that Patrick Harvie is really angry that the Scottish National Party Government is not putting tax up enough. I would have thought that this level of anger and the concern that has just been expressed would have led Patrick Harvie to vote against the rate resolution today, but no, as we have just heard, he is going to oppose it by abstaining at five o'clock this evening. As his budget letter, as he has just outlined, to Derek Mackay makes clear, will allow the SNP to win the vote this evening. The Greens are so angry that they will oppose it by letting the SNP win. It is curious, because last year, the tax package was devised by the Greens. Now that they have reflected, they are angry about it. So, if the people who invented the tax system are not even going to vote for it, I am not surprised that anybody else in the chamber is going to vote for it either. Back in 2016, the Liberal Democrats were the first to advocate the use of the new income tax powers gained by the Scottish Parliament under the Kalman commission powers. Powers that we drew up in the steel commission and the Campbell commission, and powers that we are determined to use responsibly. We said that a modest tax rise could secure a significant financial investment for education without resulting in adverse behavioural change. We were never in favour of ramping up tax at every budget and at every opportunity. It was about the balance. Everyone knows that the SNP broke its 2016 election manifesto commitment on income tax. It said that there would be no rise for basic-rate taxpayers. What it did was rebrand a lot of the basic-rate taxpayers as something else stuck up their tax. It was dishonest. The SNP told taxpayers that there would be no tax increase before putting up the tax. Thankfully, the SNP's 2016 manifesto was wrong. It is early days, but there seems to be no evidence that I am aware of that the tax increase has driven taxpayers out of the country. However, it is a delicate balance. Sometimes it is about perception and future intentions. If taxpayers believe that tax increases will come with every budget, then we may see adverse behavioural change, so it should be treated with care. However, so far, with this budget, the Government has been careless. The budget agreement has five separate tax rises. There is a freeze in the higher-rate tax threshold. The council tax increase above the 3 per cent promise by the SNP in its manifesto, which is another broken promise. The plastic bag tax increase, which breaks the important link between charities and the charge and puts some of the money into councils. The tourism tax and, of course, the workplace car parking levy. A last minute poorly prepared amendment to the transport bill. Irrespective of the merits of those individual changes, the overall impression is one of a Government that is ramping up tax in a wide range of areas and at every budget. All five of those increases were not in the SNP manifesto, many of them were not even in the green manifesto. The Government is making it up as it goes along, without a mandate for change and with a tax agenda that is apparently unstoppable. Derek Mackay. Most of those subject areas that Willie Rennie has just mentioned are powers that local Liberal Democrats are asking me for through local government. As Willie Rennie is saying that Liberal Democrats are wrong and local government to be asking not necessarily for tax rises but for the powers through localism that the Government is proposing. Willie Rennie. I do not support, given local government, a bunch of taxes that do not raise the money that is necessary and calling it local government financial reform. It is a con and it is disrespecting councils. It is not proper local government financial reform. Therefore, I urge the Government to be very delicate and careful with its proposals. That is bad news. It is bad news for those of us who support modest progressive tax changes that deliver a benefit to public services. It is bad news as some of those taxes will not work. They will not deliver the investment that we need for public services and they will give progressive governments a bad name. Flaws in this approach cannot be hidden by the fig leaf of local government finance reform. Handing councils, a bunch of taxes that will not work and will not raise the funds that councils need, is certainly not reform. It is another example of this Government treating councils with the disrespect that has come the norm for this Government. We must win the argument that modest progressive tax changes can work. I want to give confidence that those progressive modest change is possible and it is good for public services. This budget does not help with that mission. We will oppose it today. We will oppose the right resolution. If the Greens are really angry, they will join us as well. However, as ever, it is all about independence, keeping the independence majority together, no matter what the damage is to progressive politics, those two will always be together. We will move on to the open debate. Time is really tight, so speeches of under six minutes please to avoid penalising members towards the end. I remind all members that they should always speak through the chair, even in interventions. I now call John Mason to be followed by Bill Bowman. Thank you very much, Presiding Officer. I welcome the resolution as a continuing effort to move to a more progressive and fairer income tax system and, hopefully, eventually to a fairer overall tax system. Clearly, our focus today is on income tax, but this is not a devolved tax and we have very limited or no control over many aspects of it. I think that many of us would agree that income tax is one of the fairest taxes as it is linked to income and those who are earning more rightly pay more. Property taxes such as council tax or rates and sales taxes or VAT are also necessary in having their place. However, criticism of them is that they do not take account of ability to pay, at least ability based on income, whereas income tax does take ability to pay into account. The UK income tax system is overly complex and has many weaknesses. One of the main criticisms is that we actually have two income taxes as Patrick Harvie touched on, namely income tax itself and also national insurance. National insurance is particularly unfair as it is regressive, with a starting rate of 12 per cent but reducing to 2 per cent for those on higher incomes. So someone on 20 per cent income tax and 12 per cent national insurance pays 32 per cent on a fairly low income, while at the upper end 46 per cent is the top, plus 2 per cent national insurance giving a total of 48 per cent. If you combine the two, the range is from 32 per cent at the bottom to 48 per cent at the top, which is far, far too narrow in my opinion. It has been repeatedly suggested to Westminster Governments that it would be both fairer and much simpler if income tax and national insurance were to be combined, however, they have repeatedly refused to do that. Perhaps that is because the media focus tends to be on income tax and not on national insurance, so if the two were combined, taxpayers throughout the UK would see much more clearly what an unfair and regressive system the UK currently has. Frankly, I would rather we had a combined rate of tax and national insurance starting at perhaps 10 per cent and going up in steps to perhaps 60 per cent. I realise that I have argued this before and I will continue to do so because it is a reminder that any Scottish Government of any party is having to build on a very second rate UK income tax system, so our first problem is a flawed UK system. I mean to suggest that the second major problem that we face today is that the Parliament has control or influence over only a very limited range of taxes. The UK controls corporation tax, VAT, inheritance tax to number three. If we were able, as a free country, to use a whole basket of taxes, then there might be less emphasis on the rates of income tax and we would be able to put more of the burden on to those who are very wealthy. The main reason we are only to be assigned a share of VAT in due course rather than being allowed control over it has been that the EU does not allow VAT variations within a state. However, if we are to leave the EU and I am totally opposed to that, then it does appear to be possible for VAT to be devolved. Clearly, we would have to look at each of those taxes individually and consider how best to use them if they were devolved, but it does seem clear that Ireland has used variations of corporation tax to its advantage and even states in the US can and do vary sales taxes. I understand that the Conservatives are arguing that income tax in Scotland is too high and we should be cutting tax while also cutting expenditure, so the Tories are arguing, let's be clear, that they want to cut schools, they want to cut hospitals and they want to cut local government. Now that is fair enough, they are entitled to that position but I am certainly glad that majority in this Parliament disagree. On the other hand, I think that the Greens and possibly Labour would feel that income tax is not high enough or progressive enough and my sympathies are certainly more towards them than towards the Conservatives. If we come back to the powers that we actually have, I wonder what the member's opinion is, that those earning just over £43,000 are paying the same levels of income tax as those earning up to three times that amount. I have tried to explain already that I would like to see a more progressive system right across the board. However, I think that I am just going to go on to this now about the comparisons with England and we do have to be just a little bit careful about that. Frankly, I do not like constant comparisons with neighbours down south. It is not healthy for an individual or a family or a country to be constantly comparing with the folk next door. We know that the pressure children in particular can put on parents because we want the same clothing brands or the same IT products as their school peers. As a country, I believe that we have to look at our income and expenditure and decide what is right for us, without being fixated so much about what England is doing. However, at the same time, I accept that we are in bed with an elephant and we have to tread carefully with tax such as income tax, where residents can be changed fairly readily and the last thing that we want to do is lose taxpayers from Scotland and subsequently lose all of their tax to the rest of the UK or anywhere else. Therefore, I think that there is grad—I do not think of time, sorry. The member has just concluded that he has only got six minutes. Therefore, I think that this gradual move to differentiate our tax rates and, in fact, our whole tax system is the right approach. We do not yet know in the longer term how many people will choose to be in Scotland because there are higher taxes and better public services, or on the other hand how many people will want to go to a low tax, low service regime that England aspires to. Therefore, in conclusion, I certainly support the motion today. As I have tried to argue, we are dealing with a very flawed UK system and a flawed UK tax system. However, we are here where we are and I support this plan for Scotland, which makes us a bit more progressive and a bit more fair than we have been. I thank you very much, I call Bill Bowman. We call back Ian Gray, Mr Bowman, please. Thank you, Deputy Presiding Officer. As the third chartered accountant to speak in this debate, I hope that everybody is still managing to keep awake. Today, the SNP seeks this chamber's agreement to the proposed rates and bans for Scottish income tax. The income tax proposal today will punish hard workers, raise taxes and damage Scotland's overall economic growth. As has been said in the chamber before, the SNP and its endeavour to deliver those policies has broken its promises to the Scottish people. Derek Mackay has forced more tax rises on Scotland against the wishes of almost two thirds of Scots who voted for parties that promised not to raise taxes in the Scottish Parliament election. Two years in, the only thing that Mr Mackay has stayed true to is his willingness to use the ever-eager greens to push through his budget. Like with poorly conceived car tax, in which he has admittedly done no economic analysis and has the audacity to propose finding businesses pounds for every day that they do not fully comply with the rules on declaring car parking spaces, hardworking Scots and businesses are rightly appalled by this and dissent amongst his own supporters should tell them what a disaster this tax is going to be. Irrespective of the SNP and Greens grubby deal, the SNP's budget was increasing by £521 million in real terms in 2019-20, thanks to the Conservatives and the UK Government. The block grant from the UK Government will rise by 1.7 per cent in real terms next year, and the Scottish Government's budget will increase by £1.1 billion in cash terms in 2019-20. This is on top of the increase to the tax-free personal allowance, £12,500, and means that spending cuts and tax rises are proposed today are Mr Mackay's choices, not a necessity. Those decisions have real-time consequences. We are talking about Scotland's fiscal deficit under the SNP being three and a half times the size of the UK deficit and nearly double any other EU country. We are talking about the gap between the UK and Scotland deficits as a percentage of GDP being the largest since GERS records began in 1998-1999. We are talking about the erosion of trust between the Scottish Government and ordinary Scots. Since 2010, the Conservative UK Government has cut taxes for Scots on the basic rate by more than £1,000 and increased the tax-free personal allowance, if as quickly. Tom Arthur is grateful to Mr Bowman for giving way. I wonder whether he could clarify a point for me. Is it Scottish Conservative party policy that income tax rates in Scotland should not be a penny higher than they are in the rest of the UK, and that income tax rates threshold should not be a penny lower than they are in the rest of the UK? What we say is that the taxation here should be competitive for the rest of the UK. In response to the decision, the SNP has broken a 2016 election promise and has raised taxes on anyone earning over £26,990, who will now pay more in tax than they would in the rest of the UK. Is it a decision to put those on low and middle incomes and Scotland's larger economy at risk through this budget, a responsible thing to do? The Scottish economy is suffering under a decade of SNP mismanagement and incompetence, which has, according to, for example, the Scottish Retail Consortium, produced the worst real-term December sales figures in 20 years. I have had an intervention, I do not have time. Calls have been made for the SNP to cut business rates, support business improvement districts across Scotland, free up-planning restrictions in town centres and increase the use of public procurement to support the local economy. Firms across my own area of Dundee in the wider north-east know the frustration of watching this Government work all too well. Incidents such as the administration of McGill and the closure of Mitchell and Production are becoming more frequent in response to the SNP's failings. Moreover, increased public spending and higher economic growth in Scotland has been helped as a result of a significantly higher block grant. Will this harmful record and the damage that it is doing to our wider economic productivity mind, I want to repeat that the spending cuts and tax rises proposed today are Derek Mackay's choice, not a necessity. The SNP's damaging tax proposals have been condemned by respected bodies, including the Federation of Small Businesses, the Scottish Life Sciences Association, the Scottish Retail Consortium, CBI Scotland and the Chartered Institute of Taxation, who argue that income tax could become a major adverse issue for companies keen to attract the best talent. That income tax rises proposed by the SNP mean that anyone earning over £26,998 will pay more than they would in the rest of the UK. Those paying the top rates will rearrange legitimately their affairs so that the tax paid in Scotland reduces. The saddest aspect of all of this is that the attack on Scottish income tax has been exacted willingly, inflicting economic hardship on Scottish workers and risking the Scottish economy as a political choice by Derek Mackay and the SNP. While the SNP and the Greens might be content to view hard-working Scots as a golden goose, on those benches we stand up for public services, we stand up for hard-pressed Scots and their families, we stand up for fair taxation and we stand up for supporting Scotland's economy. The SNP has promised much but failed to deliver on the economy for more than a decade. It is time that they were held to account and they will be for this. Thank you very much Mr Bowman. I call Ian Gray to be followed by Emma Harper. Mr Gray, please. Thank you very much, Presiding Officer. This really should be an annual debate of substance, as after all, in many ways, a symbol of the maturing of her Parliament. This is the 20th anniversary of the formation of this Parliament. It is formed, of course, following a referendum, a referendum that, uniquely in the referendums in my lifetime, brought the country together rather than split it apart. James Kelly is correct that it brought the country together in the belief that it is a Parliament that would strive to make Scotland fairer, not less fairer. However, a referendum where the people of Scotland even voted that the Parliament should have taxation powers, although, as we all know, the powers that were originally introduced were flawed and therefore never used. A correction first in the Kalman commission and then later through the work of the Smith commission, six weeks of my life and some other here's lives too, we will never get back again. Much of which was spent exactly trying to thrash out a scheme of devolution of tax and, in particular, income tax, which maintained the balance between that and the capacity to pool and share resources across the United Kingdom as well through the Barnett formula. It was a difficult negotiation, but left this Parliament far more powerful than it had previously been, and the debate should reflect that. Sadly, the debate is rather constrained for the reasons that John Mason alluded to, because the loudest voices in the debate and in the run-up today have rather been the Tories who seem offended by any difference in taxation here in Scotland compared to the rest of the United Kingdom, although it makes me wonder what they were arguing for through those weeks in the Smith commission or, indeed, the SNP, who also seemed determined to compare their tax plans with the rest of the United Kingdom, although, on occasion, they argue that they are taxing more in order to appear progressive and, on other occasions, they argue that they are taxing less in order, I suppose, to appear more popular. However, in each case, everything is seen through the prism of that comparison, as John Mason said with the neighbours. That is not what the debate should be about. It should be about the tax that we need to raise and how we raise it for the responsibilities that we have. It should be about our capacity to respond to our citizens' needs and the breadth of our vision to invest in our nation's futures. To be fair, I think that Patrick Harvie and the Greens do get that. Indeed, when I look at the press release that they put out earlier today, it seems very clear to me that they believe that the plans that have been brought forward to us this evening fall well short of that. They warn the Scottish Government that it cannot afford to keep stalling on action to reduce inequality and to protect public services. They complain that we have a Government reluctant to anger right-wing voices by going further on income tax. What puzzles me, then, is why, when it comes to this evening's vote, the intent to exercise all the political pragmatism of Pontius Pilate by simply abstaining and allowing this tax plan, the object, to move through? I am grateful to Ian Gray for giving way. I hope that he heard in my speech a recognition that this is not perfection, but surely the kind of maturity from a Parliament that he is asking for would involve all political parties putting forward positive suggestions for change, trying to achieve something different in Scottish budgets. That is what we have done and I think that the Parliament would be a lot better if every other party did so as well. I will give your time back, Mr Gray. You were anxious. Perhaps Mr Hervie should reflect on the fact that the budget might be better if he was willing with us to exercise the leverage that a different vote this evening would give us. Perhaps we could do more to address those cuts to public services and the other issues that many have brought up. No, I do not have time. The question has to be for us. Do those tax plans provide us with the support that we need for the vulnerable? They clearly do not. One in four of our children live in poverty, so how can it be right that for anyone earning up to £124,000, they will pay less tax this year than they did last year? That cannot be the right decision to take in those circumstances. It is a different decision. It would have allowed us to provide that additional £5 in child benefit to raise £30,000 of those children out of poverty. What about this nation's future? How can it be right that we provide that tax cup because it is a tax cup for the wealthiest in our society? People say that the UK made a choice to do with the allowance, but the powers that we have allow us to take that away and to make sure that those who earn more pay more. That is what the powers that we have allowed us to do, and that is what we should have done instead of producing a budget that cuts that investment in our future, cuts funding for our universities, cuts funding for our colleges and cuts hundreds of millions of pounds from the local authorities who are responsible for funding our schools. No, we will not support the subdication of responsibility nor the slack of ambition for our nation. We will oppose that this evening. Thank you very much, Mr Gray. I call Emma Harper to be followed by Rachel Hamilton. I am pleased to be able to speak in this important debate this afternoon on the Scottish Rates, Resolutions and Settlement as a member of the Parliament's Finance and Constitution Committee. I would like to focus my points— Just a wee minute, Ms Harper. I know that we are shocked. I am pleased to carry on a conversation across the chamber when somebody is speaking. Ms Harper, please. Thank you. I would like to focus my points this afternoon on income tax, as well as the uncertainty that Brexit has, and indeed it is continuing to cause for businesses and our economy areas, which I have participated in the analysis as part of the committee membership. As members will know, in the budget for 2019-20, income tax remains partially a devolved tax, with the responsibility for defining the income tax base, including the changing or setting of income tax relief and exemptions such as the personal allowance being matters reserved to the UK Government at whichever rate it chooses to set the bans for those areas. However, the Scotland Act of 2016 gave the Scottish Parliament the power to set all income tax rates, as well as the thresholds of bans that apply to the non-saving non-dividend income of Scottish taxpayers. The income tax paid to HMRC by Scottish taxpayers is then given to the Scottish Government. I am pleased to see a commitment from HMRC to ensure that its database of Scottish taxpayers is kept up-to-date and regularly checked. I would ask the Scottish Government to ensure that this HMRC commitment is honoured. The income tax bans set out by Scottish Government ensure that middle-to-lower earning taxpayers, such as the majority of nurses, teachers, social workers and healthcare professionals, remain protected. That has been delivered by an inflationary increase in the starter and basic rate bans, as well as through no changes to rates of tax. I remind members that I am a nurse, but it means that, for example, nurses in the receipt of a Ban 5 salary of between £22,128 and £28,746, the majority of nurses, 68 per cent when last reported in 2016, will either be on the proposed Scottish basic rate of tax paying 20 per cent in rates or will be on the intermediate rate of tax paying just 21 per cent. Therefore, that means that nurses on a starter Ban 5 rate will be paying the lowest tax levels across the whole of the UK for a person on this rate of income, which is welcome and actually fair. In honour in the Government's commitment to fairness and equality across all aspects of taxation policy, while at the same time raising additional revenue to invest in public services and the economy, I am pleased that the Scottish Government has proposed a freeze of the higher rate tax thresholds, freezing the proposed higher rate threshold of £43,000, and the top rate will remain frozen at £150,000. I mentioned this step as it allows Scotland to remain an attractive place for business, an attractive place to grow our skilled workforce as well as an attractive place for the higher rate earners to remain in Scotland. In doing so, it allows the Scottish economy to continue to grow, particularly as we are now seeing an ageing population on the rise and the need for inward migration, particularly into our NHS and social care and as well as our agricultural sectors. Attracting people to live, work and study in Scotland is crucial for our economy, and I would be wrong not to mention the impact of Brexit and its having on our Scottish rates settlement and the uncertainty that it has caused for businesses and the economy. The Finance and Constitution Committee's report on the 2019-20 budget highlights the problems Brexit has caused for our economy. The report shows that, since November 2016, the OBR's forecasts have reflected provisional broad brush adjustments to incorporate the possible impact of Brexit. Those are notably that trade intensity, net inward migration and business investment and productivity growth would be weaker than would otherwise have been if the case should have been that the UK voted to remain part of the EU. Indeed, the OBR told the committee that it had a forecast prior to the referendum showing that, assuming that there would be a vote to remain in the EU, the economy would grow by roughly 4.5 per cent between the time of the referendum and now. That is staggering. Should the people of the rest of the UK—I say the rest of the UK because Scotland voted to remain by 62 per cent—if the rest of the UK had decided to have remained part of the world's most successful union and single market, we would have seen a sharp rise in our economic prosperity, but instead we are seeing businesses leave the UK, a fall in consumer confidence and a negative impact on the economy. Therefore, in my view, reaffirming the need for Scotland to remain part of the customs union single market, as well as maintaining free movement of people for the interests and benefit of our economy is absolutely what we need to support. In conclusion, I would like to put on record my support for the Scottish Government's proposed budget for 2019-20, as it allows for Scottish taxpayers on average salaries to remain protected while also remaining the lowest taxed in the UK. That budget allows for Scotland to have some stability, particularly in the time of Brexit uncertainty, and for Scotland to remain a welcoming and attractive place for businesses, workers and families to come live, work and study, which is key for our economic success. The SNP has gone tax-crazy. Whatever form it comes in, whether it is income tax, council tax or car parking tax, it seems that, as we get further into this session of Parliament, it seems adamant to raid the paid pockets of hard-working Scots. Let's get the facts straight first. Promises have been broken. We know that, in their 2016 manifesto, they promise not to increase taxes yet. 1 million Scots are now paying more in income tax. We see the block grant increase by £500 million, and yet the cuts keep coming. As ever, with this tired and out-of-touch Government, it is always pay more, get less. Almost two-thirds of Scots voted for parties who promised not to raise taxes, and we were one of them. That cannot be said of the SNP now. I will take an intervention from Stuart McMillan. Rachael Hamilton for taking an intervention. Would Rachael Hamilton tell the chamber what the level of UK national debt is, as compared to what it was in 2010 when the Tories came into power? Ms Hamilton. Do you know that what your voters will not support the SNP any more after Nicola Sturgeon has broken her tax promises? That is what the SNP party needs to think about, not bothering about other issues other than its rates resolution debate today. The FSB has warned against more taxes in Scotland, and Andy Wilcox has quoted and said that the budget breaks new ground. It must not open the floodgates to a host of Scottish supplements, chargers and levees. Now that the SNP has had to do a back-of-the-fab packet deal with the Greens, for years it will be impossible to predict the new stream of taxes. Will it ever end, and how much will they increase? Let us be clear here that the new income taxes will hit hard-working families the most and also businesses. We are not talking about the bankers, we are talking about headteachers, police sergeants and senior nurses. Those people treat our ill, teach our children and keep our communities safe. I have not got the time, sorry. They, not any hard-working scot, should have to pay more just because they live in Scotland, and anyone earning over 26,990 will pay more tax than they would in the rest of the UK. As a representative of a border constituency, I am concerned over the impact of the widening tax gap that I have on my constituents. I completely disagree with what John Mason had to say earlier about the behavioural change that may happen. I am glad that the Scottish Borders Council was unanimous in its opposition to the tourist tax and to the car park tax. Given the damage that this would cause to our area, it is rich of the SNP Government to ask councils, after years of funding cuts, to increase council tax. Tax are tourists then charge ordinary working folk to park at their workplace. Even though the borders have come out against the workplace car parking levy, some 250,000 Scots might be affected by this levy. In Glasgow and Edinburgh, for example, many of whom are my constituents commuting to work from a rural area, Patrick Harvie sits from a sedentary position talking about the numbers that are not out yet. Where are the figures, Patrick Harvie? The entire point that the centralising Conservatives do not seem to understand is that this is a power given to local authorities to design a scheme that is right for their own area. If they think that it is wrong for their own area, they will not do it. What on earth is wrong with giving councils the ability to make their own choices in their own local context? That was a rather long intervention, Patrick Harvie, but the Conservatives do believe in empowering local authorities by devolving financial powers to councils. We support the devolution of measures that will improve accountability and drive local growth. In terms of the economy, that is so important. You might sit there and laugh, but growing and not shrinking the tax base is really important, and surely that is something that we should have as a common goal. In the borders, we need to attract more businesses and industries to create jobs. If we are to see the area prosper, we need more highly skilled and highly paid jobs to attract people to live there. Given that travel over the border to work every day, the tax gap is detrimental to attracting the best. Would a senior teacher in North Thumberland, for example, think twice about moving up the career ladder, applying to become a headteacher in coldstream when they could stay in the north of England and pay less income tax? When it comes to the NHS and the borders, we continue to struggle to recruit specialist staff and doctors. Our constituency has a lot to offer, but higher taxes and higher LBT may certainly be discouraging people from moving. I am concerned that that impact will have in drawing from the pool of talent that exists across the UK. The full impact of the tax gap is yet to be realised, and it will definitely be more pronounced than the Scottish Borders, where people can travel over the border for work. However, we know that the Scottish Fiscal Commission has said that Scotland will lose approximately £34 million over the next five years because of behavioural change. The reality of the widening tax gap will hit hard, and Scotland will suffer before it because of it, sadly. In conclusion, we on these benches cannot support the rates resolution motion. It is bad news for hard-working Scots, and it is bad news for the economy. The Scottish Government has broken its promises and its Scottish taxpayers who will pay the price have well and truly made it clear that, if you are aspirational, you are climbing the career ladder, that Scotland is not the place for you. Repeatedly, we have seen that SNP Government failed to grow and develop the Scottish economy. With the SNP, Presiding Officer, it is always pay more, get less. Can I begin by expressing my pleasure at contributing in this debate today? I debate on our income tax rate and, ultimately, a holistic view of the resources that are available to the Scottish Government to deliver for the people of Scotland. That is exactly what we are doing. We are delivering for the people of Scotland doing the day job, as some people would say. Indeed, this Scottish Government is investing in essential public services, all while ensuring that 55 per cent of income taxpayers in Scotland pay less tax than those earning the same income in the rest of the UK. A fact that those on opposition benches do not like, just like Brexit, is that the Conservatives enjoy a political hokey-cokey that they are in and then they are out. Our budget deal means providing additional funding and flexibility of up to £187 million next year to local authorities, including additional funding of £90 million to local authority core revenue grants. We have also raised the cap on council tax increases by inflation to 4.79 per cent, whereas keeping it below 5 per cent in the UK and maintaining Scotland's place is the lowest tax part of the UK. Has anyone checked what has been checked? No, I have no time. It has been charged in some English councils recently. Go and check it. That being said, the Scottish Government has been encouraging local authorities to take account official budgets and remain at a flat 3 per cent. No, I would not. It enables local authorities to offset 2.2 per cent of the contribution to adult social services in the coming year to help them to manage their budgets, who will protect £160 million of investment from the Scottish Government. That means in total that if local authorities use their full tax powers, local authorities will have £620 million more in the next financial year. I wish to turn to our hardworking public sector staff such as our police and NHS workers who have paid more and are better off as a result of the tax and spending decisions that are made in Scotland. A host of public sector posts in Scotland will learn more than the equivalence elsewhere in the UK after the SNP tax proposals for 2019-20. Take effect, thanks to the higher salaries for public service workers such as the police and NHS workers in Scotland. In fact, a hospital porter atop of the band 2 NHS pay scale will be £634 a year better off compared with her English counterparts. A staff nurse at the bottom of band 5 will be £208 better off than her English counterparts. A paramedic on band 6 pay scale will be £571 better off in Scotland than in England. A police constable atop of her pay scale will be £1,200 better off in Scotland than in England. So, when the Tories would prefer to offer tax breaks to their highest earners, the SNP is committed to creating a more progressive, prosperous and equal society for everyone. I have to say that I agree with that. I had to listen to absolute rubbish comments by people, and I am going to come back at them with what I believe is the truth. The Scottish Government is predicting lower and middle-earning taxpayer pairs and making tax system fairer and more progressive, taking a different approach to the rest of the UK. The Scottish Government will ensure that the Scottish tax is more progressive, supports additional investment in public services and invests in public services that allow us to continue to deliver increased spending in NHSs beyond other parts of the UK. Businesses benefiting from our investment in infrastructure, broadband, research, development, business rates, support, investment in skills and training and, of course, our social contact, including childcare, personal care and tuition fees—remember Rachel Hamilton—abolished prescriptions, fees and abolished. It exceeds what it provided elsewhere in Scotland and ensures that taxpayers in Scotland have the best deal in Scotland. Overall, taxpayers get a better deal from this Government than what they do for other Governments in these islands. That, of course, is all, while the SNP Government faces continual austerity measures from Westminster, which has seen Scotland's discussion of resource grant since 2010, being reduced by 6.5 per cent or £2 billion lower in real terms. I wonder where the Tories get their figures fae. I really do, and while Scotland's discussion of resource budget allocation will be reduced by 6.5 per cent or almost £2 billion lower, that is the real facts, not the fantasy that some of these parties live in. That really angers me. Of course, the Tories will try to point out in 2019-20 discussion of resource block grant entries in real terms. However, after removing the uplift in health funding, we realise that the 2019-20 fiscal resource budget allocation is lower in real terms in 2018-19. Once again, you are fooling no one. Indeed, our own budget process this year has set against the backdrop of Westminster's system that crumbles before your eyes. Further into chaos, your UK Government season to function, Scottish Government doing well, to the cabinet secretary and to the excellent minister in front of me. I think that you have done a good job, continued to do so, and I will support you continually. Thank you very much, Mr Lyle. Thank you, Presiding Officer. In closing for Labour, can I start by reminding the chamber, as Ian Gray did, that it was Labour that delivered this Scottish Parliament over 20 years ago? I recall at that time that the SNP said that Labour could not deliver a pizza—never mind a Parliament—while they were wrong, just like they are wrong today to propose a rates resolution that is going to increase wealth inequality in Scotland. We know that the gap between rich and poor continues to increase, a rates resolution that is regressive with those earning £43,430 paying the same levels of income tax as those earning up to three times that amount, and a rates resolution that is going to leave councils struggling to deliver statutory services and having to cut other essential provision, such as music tuition, swimming pools and libraries. In terms of cuts, the council tax rises are, of course, included in the Government's budget presentation. However, if Labour councils raised the council tax by the 4.8 per cent that Richard Lyle just mentioned to try to reduce the cuts, then no doubt that Dennis Mackay is going to say that he only recommended 3 per cent. However, if he only increased it by 3 per cent, no doubt he is going to say that cuts cannot be that bad if Labour councils did not use their full council tax powers. I think that Derek Mackay could, and should use his fiscal levers to stop the cuts, but instead what he is doing is forcing councils to make difficult decisions and then is calling it empowerment. Orwell's Double Think and Newspeak could have been written for Derek Mackay. Of course, there is still time to change this budget, and the SNP could be made to change the budget if the Greens were to take the principled position of voting against this rates resolution tonight. I am standing on a vote, and a regressive taxation proposal is hardly principled. I will take the minister. The Labour Party has had the last few months to engage, negotiate and potentially change the budget, as she claims that she can do tonight. What would Labour's proposals be for the higher rate tax? I thank the member for the intervention. The Labour Party did engage as Derek Mackay well knows. James Kelly did engage, but, unfortunately, Derek Mackay was not listening. We have been consistent in saying that we would reintroduce the 50-pence top tax rate that was taken away by the Tories. We are consistent in that. It was in the SNP manifesto that I remind the member. The First Minister of Scotland, the late Donald Dure, when he was delivering the Scotland Bill, pointed to the first sentence. There shall be a Scottish Parliament memorably said, I like that. Donald Dure was also attributed with pointing out that devolution was a process, not an event, clearly not an end in itself, and so it has been. More and more powers devolved making this one of the most powerful devolved parliaments in the world. Of course, as Ian Gray noted, we started out with tax-bearing powers in the Scottish Parliament. That was the second question for those who are old enough to remember in the vote in 1997. However, we should not forget either that John Swinney's financial secretary secretly gave up that power in 2007. That was a power specifically and democratically voted for by the people of Scotland. It was certainly a historic year in 2017 when the Scottish Parliament regained powers over tax and set the rates and bans for the first time. Of course, that went off with a whimper rather than a bang when those new powers were not used fully to stop the cuts and challenge Tory austerity. Perhaps the members of the front bench would like to listen to those points. Last year, the SNP was neither bold nor ambitious with the rates resolution. Once again, we witnessed a cuts budget, and here we are again building on accumulated cuts. I do not think that I have time to give an intervention. I have already given one to the minister. Those are tax plans that give a tax cut to the rich and the inflict cuts to our communities of £230 million. Labour would ask the riches to pay their fair share and to invest in our public services, but Derek Mackay said no to that minister to answer your question of earlier. That resolution also shows up a budget that does nothing to tackle child poverty right here right now. Labour asked Derek Mackay for £5 per child per week, top up to child benefit and churches, trade unions, poverty, academics and charities. All agreed that that would make a huge difference, but when we asked again Derek Mackay said no. Despite the rhetoric around the shocking Tory to child policy and rape clause, when it comes to taking action to mitigate it, once again, Derek Mackay said no. Yes, he did. He said no when he was asked to do that. No wonder the public are wondering what the SNP priorities actually are. Of course, overall, that has been a predictable debate. The Tories will never want to fairly tax the rich. They prefer to attack the poor with their shocking to child policy and their utterly discredited universal credit. The Greens talk about fair tax, but tonight they intend to abstain and then justify the support for an SNP budget that cuts local government beyond the bone. Patrick Harvie intervened in me, but I do not see that his parking at work scheme has been fully costed by the Greens. Judging by Mike Rumble's comments earlier, the Liberals are not too keen to fairly tax the rich, either. The SNP, in opposition to Westminster, calls for the reinstatement of the 50p tax rate that was removed by George Osborne, but here, when the Government has the power, it refuses to tax the rich. Instead, it prefers to preside over cuts to jobs and services to local government, services that are needed by the poorest and most vulnerable in society. I cannot take an intervention. The SNP argues that Westminster holds all the power, but in reality this Government has the devolved power to change our income tax brackets to ensure a more progressive and fairer tax system, to tackle child poverty immediately and to stop the vicious cuts to local government. Scottish Labour stands for the many, not the few, and we will not support the timid tax proposal that simply passes on turbo-charged Tory austerity to our councils and sees poverty continue. Cuts to councils are cuts to communities. The SNP tax policy and cuts budget has been influenced by the Tories, has been aided and abetted by the Greens and it will not be supported by Labour. Let me start with some consensus and agree with something that the finance secretary said during stage 1 of the budget debate. When I asked him how he would deal with massive cuts to public spending in an independent Scotland, Derek Mackay told the chamber that his priority must be to grow the economy, not increase tax but to grow the economy. For once, I agree with Derek Mackay. I am glad that he has finally come round to our side of the argument that the only sustainable way to deliver increased public spending in Scotland is by growing the economy, not increasing the tax burden on hard-working families. I will in a second, but that is exactly what today's rate resolution does. It increases the tax gap between Scotland and the rest of the UK. It will further damage an already stagnating economy and that is why we will be voting against the rate resolution at decision time. I will give way. Immigration policy is going to help to grow the economy or not? Dean Lockhart? It is interesting that the minister runs to Brexit as an excuse for the SNP over the last 11 years failing to grow the economy. You have had 11 years to grow the economy and you have failed miserably. A wide range of issues were raised during the debate this afternoon. Let me pick up on three of those issues. First of all, the growing list of broken promises when it comes to SNP tax policy. Murdo Fraser and Rachel Hamilton reminded everyone that this is an SNP government elected on a clear manifesto promise not to increase the basic rate of income tax. The wording for the SNP Hollywood manifesto could not have been clearer. We will freeze the basic rate of income tax throughout the next Parliament to protect those on low and middle incomes. The Deputy First Minister was even more explicit when he told the chamber, I want to say to teachers and public service workers that the last thing that I am going to do is to put up their taxis. However, here we are now over a million workers in Scotland paying more income tax as a result of that broken manifesto pledge. Those SNP broken promises do not end there. This is an SNP government that has also promised not to raise the cap on council tax, but thanks to the SNP once again caving in to the Greens, low-income households are now facing council tax hikes of almost 5 per cent. That could mean an increase of £500 a year in tax bills. Willie Rennie, in his contribution, listed a number of other broken promises from the SNP, including the tourist tax and the plastic bag tax. In her opening remarks, Kate Forbes claimed that the SNP's tax policies are fair and progressive. We also heard the SNP's standard line that the Scottish Conservatives want tax cuts for the rich. However, as always, once you look beyond the SNP spin, the facts tell us something very different. It is the UK Conservative Government that has delivered tax cuts for more than £2.4 million lower-paid workers by increasing the personal tax threshold—I need to make some progress—by increasing the personal tax threshold every year since it was elected. In contrast, it is the SNP that has increased income tax for low and middle earners. Everyone earning more than £27,000 will pay more tax in Scotland as a result of the SNP's broken promise. It is also the SNP that is introducing the new car parking tax, which could cost up to £500 a year—a regressive tax, not one that is based on the ability to pay and one that will hit the lowest earners the hardest. It is no wonder that the people of Scotland are now asking where is the fairness in that. It is an SNP Government that is out of touch. Instead of increasing the tax burden on lower and middle earners, it is time to find that the Secretary of State recognises that the real priority should be to expand the tax base in Scotland. The need to expand the tax base is clearly highlighted by the Scottish Fiscal Commission and the OBR. Their most recent forecasts show two things. Scotland has a lower, prorata number of higher and additional rate taxpayers compared with the rest of the UK and that income tax revenues for the UK as a whole are forecast to grow significantly more than income tax receipts in Scotland. Those forecasts paint a grim fiscal outlook and will only mean one thing, less money being available for public spending in Scotland. The answer to this fiscal challenge is not to increase the tax burden on the diminishing tax base in Scotland. The answer is to expand the tax base in Scotland by growing the economy and attracting more higher-paid workers to Scotland. The finance committee has heard evidence that attracting an extra 2,000 additional tax rate taxpayers would give the Scottish Government an extra £100 million a year annually to spend on public services. That is why the Scottish Chamber of Commerce has told the SNP that, the sooner our politicians realise that supporting economic growth rather than hiking up taxes is the route towards increasing revenues and improving investment in services, the quicker Scotland will prosper. We agree with that. The final issue that I want to touch on is the size of the Scottish budget. We have heard again from the SNP the standard line that UK funding to Scotland has been cut. That is simply not the case. According to Spice and the Fraser of Allander, the overall budget from the UK Government is increasing not just in this financial year but the overall budget has increased since the Conservatives came to power in 2010. In fact, the only reason that the tax burden has to increase in Scotland now is because the additional £1 billion increase in funding coming from the UK Government is being offset by a £500 million decline in tax revenues here in Scotland as a result of the SNP's failure to grow the economy. The consequence of that is that it is now the hard-working people of Scotland who will have to pay the consequences of the SNP's economic incompetence over the past 11 years. That is not fair, that is not progressive and that is why we will be voting against the rate resolution at decision time. Thank you very much, and I will take forms to close the Government Minister please till decision time. Thank you, Presiding Officer. If you are playing budget bingo, you would have had a full house pretty early on in this debate with the usual rhetoric from the Opposition parties. The Tories often talk about making this country an attractive place for people to work, live and invest in and I happen to agree quite wholeheartedly with that. The irony, of course, is that they have not just made the UK an even less attractive country but are now actively preventing people from moving here with their anti-immigration policies. Dean Lockhart rightly talks about expanding the tax base. The CBI, FSB and many others have condemned the Tories' immigration proposals as being catastrophic for the economy, with one saying that the UK Government seems hell-bent on ignoring the business community. That is, of course, consistent with the SFC's analysis, which is clear that Brexit is a key factor in the subdued outlook and, critically—that was the other part of my question to Dean Lockhart—slow population growth, which is being utterly exacerbated by the Tories' failed immigration policies of the past and current proposals. When it comes to income tax, the Tories know that there is no appetite for a further £500 million cut to our public services, which their tax policies would cause. That is not just Scottish Government analysis. Other independent forecasters, including the Fraser Rallander Institute, have produced analysis that supports those claims. Mike Rumbles My point of information is whether, having the Government taken the deliberate decision not to raise the threshold for the £41-pence tax payers in line with inflation, could you tell us how many Scottish taxpayers are now brought into that higher level simply because you have not raised the threshold with inflation? The First Minister Our commitment in this budget, which I made clear in my opening speeches, is that we want certainty for taxpayers. That is why we have not raised the rates and that is why we have frozen the threshold. However, we want to protect lower and middle-earning taxpayers, and that is why we have increased the threshold to protect them. We value Scotland's unique social contract, which is attractive, and we want to make this country attractive. We have provided, we have defended and we have extended core universal services, rights and benefits. Our commitment, for example, to free tuition, to 600 hours of free early learning and child care, which will increase to more than 1,000 hours, free school meals for all primary 1 to primary 3-year-olds, free personal care, the abolition of prescription charges, nationally concessionary travel schemes for older and disabled people. In this year's budget, contrary to Ian Gray's accusation, we have increased spend on college's resource budgets, we have increased the health resource and the total core funding package for local government is £11.2 billion. Iain Gray will accept however the college budget's resource and capital have been slashed. I would accept, and it is quite clear in this year's budget, that the resource spend has increased, and that is why it was incorrect to say that the resource budget has declined. When it comes to the economy, stats out today show that, although we will continue to invest in the economy, it is resilient. We see that unemployment rates for Scotland's women and young people are at record lows. Youth employment rates are higher than the UK rate. Female employment rates are higher than the UK rate. Unemployment in Scotland has fallen to 3.5 per cent, which is the lowest on record, and Scotland's employment rate rose again to 75.5 per cent. All that, as the CBI claimed in January, in light of fears that a no-deal Brexit would cost the Scottish economy £14 billion a year by 2034, it claimed that that was more—it claimed that that was more—Iain Gray might want to listen to this first and then I will take his intervention—than the annual public spending on hospitals, GP services and other health services. Will the Tories take the threat of a no-deal off the table? I do not know. Perhaps Dean Lockhart can answer that. Dean Lockhart mentioned the labour market statistics out today, which show inactivity levels in Scotland higher than the rest of the UK. Can you explain why inactivity levels are higher? Unemployment rates are moving in the right direction. We are aware, as I said in my opening to that point, that we are not taking our eyes off the ball. We are aware that if we are facing challenges now, those are only going to be exacerbated over the course of the next few months alone, so we will continue to target our investment to support people into work and to ensure that we are tackling the key issues of poverty. We are nevertheless, after this debate, none the wiser of about labour's tax policies. They do not know how much tax they would have to raise to fund their additional requests. All whilst the shadow chancellor said a number of months ago that he would not reverse the Tory's tax gift to the rich. The Lib Dems seem to claim credit as the architects of the SNP's income tax policies, but we will vote against it tonight, jeopardising £11.5 billion of investment in all the things that they profess to care for. The party of apparent localism until, of course, the SNP tries to devolve powers to local authorities. All parties, incidentally, appear to be localist when it comes to local authority elections. Even the Tories, who I understand, apparently voted for the principle of pursuing consent to introduce a workplace parking levy in August at Edinburgh City Council last year. Back to the rates resolution before us, our income tax policy is forecast to raise over £11.5 billion to support the best outcomes for Scotland's people and for Scotland's economy. The Opposition, with one exception, would prefer chaos and uncertainty than the certainty of revenue for our precious public services. To put that £11.5 billion in perspective, that is approximately the total core funding package for local authorities. Tonight is our opportunity to use the powers of this Parliament to build a fairer, more prosperous country. Our income tax policy is key to delivering that. We have reversed the UK Government's continued pursuit of budget cuts. Our income tax policy proposal freezes all rates, increases the starter and intermediate rate bands by inflation and freezes the higher and top rate thresholds. That ensures that 55 per cent of Scottish taxpayers continue to pay less than they would if they lived elsewhere in the UK, and Scotland will continue to be the fairest and the lowest tax part of the UK. We will not pass on UK Government tax cuts for higher earners. Our tax proposals protect those on low incomes. They make the tax system fairer and more progressive. They will raise an extra £68 million to invest in public services to tackle poverty and to support Scotland's economy. I will take an intervention. Mardou Fraser. I am very grateful to Kate Forbes for giving way. On the issue of protecting those on low pay, does she not accept that the proposed workplace parking levy will be a regressive tax that will hit hardest on those who are lowest paid? Is that not the case? Before you answer, minister, can I ask members to keep their chatter down as it is building? I cannot hear the minister. What I do accept is the whole concept of empowering and ensuring that local authorities have the powers that they need. In conversations with local authorities, they are clear that they want to be able to make local decisions about local assets that serve local interests. As a Government, we are committed to making sure that that includes tax powers. I am very mindful that I have a minute and a half, but I will go for it. James Kelly. It is just really a point of clarification. Just looking at the actual rate motion in front of us, the higher rate of 41 per cent has been set between 30,930 up to 150,000. That is not what was proposed in the draft budget. It was 43,430 to 150,000. Mention in that in terms of accuracy. Minister. Proposed as in the budget, and apparently it is a technicality in terms of the legislation to be consistent with the legislation. Back to the substance of the debate today. We will be delivering an additional £182 million in revenue against the associated block grant adjustment. Our budget delivers an NHS that is well funded. Families will have access to free childcare. Students will have access to free tuition. There will be no prescription fees and we will ensure that our older generation can benefit from free personal care. That is all delivered by sound, certain and evidence-based tax policies. Our income tax proposals in the rate resolution before us today, alongside the spending plans for 2019-20, will ensure that Scotland is an attractive place to live, work and to raise a family. Thank you very much. That concludes our debate on the Scottish rate resolution. We are going to go straight to the vote, although it is not quite decision time, but we are going to go straight to the vote on the issue. Before I put the question, I would advise members that under rule 9.16.7 stage 3 proceedings on the budget Scotland number 3 bill cannot begin unless the Scottish rate resolution is agreed to. The question is that motion 15879 in the name of Derek Mackay on the Scottish rate resolution is agreed. Are we agreed? We are not agreed. We are going to move to division and members may cast their votes now. The result of the vote on motion 15879 in the name of Derek Mackay is yes, 61, no, 52, there were six abstentions. The motion is therefore agreed. As the Scottish rate resolution has been agreed, the budget Scotland number 3 bill can now proceed to stage 3 and stage 3 proceedings will take place on Thursday. Members will also recall that the commission on parliamentary reform proposed that time be set aside during meetings for announcements from committees. In that context, I am pleased to call Bob Doris, convener of the Social Security Committee, to make an announcement on social security support for housing. I announce today that we have launched an inquiry into social security support for housing. We want to explore how changes to the social security system are impacting both tenants and landlords. It is not just the most vulnerable people in our society who can find themselves in difficulty because the rising gap between housing rents and the amount provided by the social security system but also those in work. We know that there are pressures on social housing stock and the area in which we should be able to ease this would be the private rented sector. As part of the inquiry, we will look at the extent to which social security systems assists or hinders those in need of private rented accommodation in Scotland. In February last year, the local government committee explored some of those issues around welfare reform. In the report on homelessness, it is said by Shelter that the roll-out of welfare reform and universal credit were creating a complicated landscape to navigate. That committee will explore in more detail some of the impacts of those welfare reforms as they relate to housing, including universal credit and the local housing allowance, and to our newly devolved powers and how they can contribute to that discussion. To inform our views, we are engaging with stakeholders, organisations and people with lived experience to answer five key questions. How have changes to the local housing allowance impacted on the private rented sector, particularly for affordability of rents for young people? To what extent have UK welfare reform measures impacted on private landlords' willingness to let to those in receipt of social security benefits? How does the administration of universal credit housing costs impact on the ability of tenants to pay their rent and landlords to administer rent payments? Fourthly, how does universal credit, Scottish choices and discretionary housing payments impact on the way landlords and tenants handle universal credit housing costs? In relation to all those four questions, what improvements could be made to reserved and devolved systems, including the way they interact with each other? Our committee would welcome MSP sharing details of our inquiry with interested stakeholders, constituents and networks that they feel would have a valuable input, particularly those with lived experience. Thank you for the opportunity to address that most important inquiry at the chamber this afternoon. Thank you very much, Mr Doris, and that brings us to decision time, but there are no decisions to be taken at decision time today. I ask members who are leaving to leave quietly as we move on to members' business in the name of James Kelly on the threatened closure of the hydraulics railway works. We'll just take a few moments for members and the ministers to change seats.