 That concludes portfolio questions. We now move on to the next item of business, which is a debate on motion 3063, in the name of Murdo Fraser, on taxation. I could ask all members who wish to speak in the debate to press their request to speak buttons. I call on Murdo Fraser to speak to and to move the motion. Thank you. Presiding Officer, tomorrow the finance secretary will deliver a historic budget. Not just because it will be the first budget delivered by this finance secretary, but also because, for the first time, this Scottish Parliament will have substantial new tax powers. It will have the ability, as never before, to vary the rates and bans of income tax. That is in addition to control over lands and buildings transaction tax, over the aggregates levy and over business rates. Presiding Officer, in advance of that budget statement, the Scottish Conservatives have a very clear message. We do not believe that families and businesses in Scotland should be taxed more highly than those elsewhere in the United Kingdom. It is time for the SNP to take their hands out of the pockets of hard-working Scottish taxpayers and concentrate instead on measures which will grow the economy and therefore grow the tax base. That is the way we create a more successful and prosperous Scotland and that is the way we raise the funds necessary for our vital public services, not by hiking taxes and making Scotland uncompetitive. Presiding Officer, the backdrop to this debate is Scotland's economic underperformance. I hardly need to remind members in the chamber about the extent to which the Scottish economy has been lagging behind that of the rest of the United Kingdom. Despite a shallower recession in Scotland, economic recovery has been weaker than the UK's and economic growth in real terms has been lagging behind the UK since the fourth quarter of 2009. Today's unemployment statistics tell us that unemployment is higher in Scotland than the rest of the UK and is rising when it is falling elsewhere. Economic activity here is lower, productivity is lower and business confidence is lower and is now at its lowest point since the 2008 recession. Overall, out of 30 economic indicators, the Scottish economy lags behind that of the UK on 25. The future prospects look little better. Last week, the EY item club published its forecast for Scottish economic growth, suggesting that, in the year ahead, it will substantially lag behind the rest of the UK. Only yesterday, the latest economic commentary from the widely respected Fraser of Allander institute stated that Scotland's recent growth rate is one-third of that of the UK. Going forward, growth will remain below trend and unemployment is likely to rise. That is even before we consider the consequences, whether positive or negative, from Brexit. The reason all this matters in the context of the Scottish Government's budget tomorrow is clearly stated in yesterday's Fraser of Allander report. I quote directly, with new tax powers coming on stream in April, it is vital that the gap with the UK is closed and they are absolutely right, because from April it is the performance of the Scottish economy that will determine the overall size of the Scottish Government's budget. John Mason. The member talks about gaps, and I wonder if he would accept that we are talking about two separate things here, that there is economy and taxation. Surely, is he not concerned about the gap between the very rich who are not taxed enough and the very poor? Murdo Fraser. I do think that there is a certain irony in that intervention from Mr Mason. Mr Mason and I, during the independence referendum, did, I do not know how many debates, perhaps 30 debates around the country into different groups. Mr Mason was standing in that referendum on a white paper that proposed only one change in taxation. It was not a change to tax the rich more, it was a change to cut the rate of corporation tax by 3 per cent to give a tax break to large businesses. He seems to have changed his tune entirely since 2014, like most of his party. Patrick Harvie. I am grateful to Murdo Fraser for giving way to someone who never endorsed what was in the SNP's white paper. Can he tell us that the UK Government has just made tax changes to the personal allowance and thresholds that will make every higher rate taxpayer about £15 a month better off? Does Murdo Fraser really need an extra £15 a month in his pocket when other people are to coin a phrase just about managing? Murdo Fraser. Mr Harvie is being ungenerous. He will well know the measures taken by the UK Government to more than double the threshold for income tax, lifting millions of families and the lowest paid in Britain out of tax altogether. Our record on that is unsurpassed. I look ahead to the Scottish Government's budget. I need to make some progress. I will give way later when I have time. Roughly one half of the total funds that are available to the finance secretary will come from taxes that have arrived in Scotland. LBTT, the Advocates Levy, income tax and assignation of the partial proceeds of VAT and of course business rates. If the economy does not grow, then the tax revenues do not grow either. The remainder of the Scottish Government's budget, or the other 50 per cent, comes in the form of the block grant from Westminster, now determined by the fiscal framework negotiated between the UK and Scottish Governments. In terms of that fiscal framework, it is the relative performance of the Scottish economy compared to the UK as a whole that calculates that sum. If the Scottish economy continues to underperform relative to the UK economy, we in Scotland face a double whammy. We are raising less funds in taxes from here in Scotland and the fiscal framework means that the block grant adjustment will reduce the amount of money coming from Westminster. The consequence of economic underperformance is less tax revenue to fund our vital public services. I haven't given way to the Liberal Democrats yet, so I'll take Mr Rennie. Willie Rennie. Mr Fraser, for giving way, seems to have ignored the real benefit of trying to boost the skills in Scottish society to try to boost the economy. He only seems to think that tax is the answer for boosting that. Does he not recognise the other side of the equation? I'm so disappointed with Willie Rennie's approach to this particular debate. I remember those heady days when Tavish Scott led the Liberal Democrats. Michael Russell went into the budget negotiations with John Swinney clutching a piece of paper demanding a 2 per cent cut in income tax. What a shame that under Willie Rennie the Liberal Democrats have lurched to the left and are now demanding an increase in tax. Instead of a cut, like Mr Rumbles was demanding all those years ago. What the SNP seems to have as a plan is to hit Scotland with a £1 billion surcharge on families and businesses, which will make Scotland the most highly taxed part of the United Kingdom over the next four years. Next year alone, the nationalist decisions will add an extra £212 million on to the country's tax burden, a figure that will increase in every year until 2020-21. As I said earlier, the UK Government is already on track to double the personal allowance for income tax, lifting millions out of paying income tax altogether and helping the lowest paid. The SNP wants to see taxpayers in Scotland hit with higher charges than the rest of the United Kingdom. Because of the interaction with national insurance, that means that the marginal rate on Scottish workers earning just above the higher rate threshold will become 52 per cent of their income, creating a clear tax differential with the rest of the United Kingdom. The SNP approach might be understandable. If there is change to personal taxation, we are going to raise hundreds of millions of pounds, but in the first year of operation, the maximum sun likely to be raised is just £130 million. Is it really worth for that sum of money sending out a message that Scotland is an expensive place to live, to work and to do business? Is it really worth it to make Scotland the highest tax part of the United Kingdom? We have already heard from Scottish businesses that they are concerned that they will have to pay a Scottish supplement to attract the best talent here to compensate for the higher tax rates. The same must surely apply to our public services. We are already—the NHS in Scotland is in competition with the NHS down south for top consultants, and our universities are in competition with universities down south for top academics. What assessment has the Scottish Government made of the additional costs to the public sector from those tax rises? The reality is that it will raise very little money, and it is likely to do substantial damage to the economy as a result. It is not just on personal taxation, where the SNP has got it wrong. It is doubling of the large business supplement to all properties, with a rateable value above £35,000, which means that relatively modest retail premises are affected and also have an impact on the economy. Thirteen Scottish business leaders wrote to the finance secretary in September calling for the Scottish Government to level the playing field with England. It is no wonder that we have seen retail businesses such as McEwns of Perth or McAree Brothers in Stirling closing their doors with the tax burden being a key factor. What is so strange about the SNP's approach to taxation is that it is such a departure from what we have heard from them in the past. Members who were here in previous sessions will recall the then First Minister, Alex Salmond, lecturing us week after week on the benefits of the Laffer curve, telling us that cutting taxes would lead to higher revenue. For more than a decade, the Laffer curve was the central tenant of SNP economic theory, and now the SNP is reduced to the extent that we have the finance secretary who says that he has never even heard of the Laffer curve. Where was Derek Mackay when all the rest of us were sitting on these benches being bored, rich and biased by his former boss? Why wasn't he paying attention? For years, the SNP told us that co-operation tax should be cut in order to grow the economy. SNP members, including John Mason, stood on manifesto commitments to cut co-operation tax. Of course, it was the only substantial tax change contained in the 2014 white paper, because we were told that that was the way to grow the economy and grow tax revenues. Now the SNP has done a spectacular year turn on their approach to taxation. Bizarrely, they are still committed to a tax cut, to a cut in air passenger duty, a policy that we are happy to work with them on to deliver. However, the argument for cutting APD, which is that it will generate economic growth and tax revenues elsewhere in the economy, surely applies to other taxes. Why is the logic of that lost on the finance secretary? Even the First Minister's handpicked chair of the SNP's new growth commission, our erstwhile colleague in this chamber, Andrew Wilson, gets it. He understands that the way to increase tax revenue is to increase the number of high-earning tax payers. Andrew Wilson, who at the weekend quoted the excellent example of lands and buildings transaction tax. When residential LBTT was introduced, it was supposed to be revenue neutral, but the tax take in the first year was £32 million lower than originally expected. Why? Because the then finance secretary, John Swinney, was too greedy. He hiked the rates at the upper end too much, causing a slowdown in the market, and as a result, the tax take was less than it should be. Andrew Wilson, the one-time economic spokesman for the SNP in this chamber, gets it. Alex Amman, when he was First Minister, got it. But now, under Nicola Sturgeon, the SNP have lurched to the left and are determined to hike taxes on hard-working Scottish families and Scottish businesses. The result will be not higher tax revenues, but the underperforming Scottish economy and the shrinking tax base. I have not taken the Labour intervention, so I will happily give way to Mr Findlay. Neil Findlay. If he genuinely believes what he has said, one of the ways to spread that wealth would be to have more people having high-paid jobs to pay those higher taxes. What does he say to his colleagues who have two of those jobs? Murdo Fraser. Again, I am so disappointed in that intervention from Mr Findlay. At Westminster, we are following this debate very closely. Even Jeremy Corbyn and John MacDonald, the shadow chancellor, heroes of Mr Findlay support the increase in the threshold proposed by the chancellor, Philip Hammond. It seems to be the case that Scottish Labour's criticism of Jeremy Corbyn is that he is too right-wing, he should be more left-wing, and he would fit better into Mr Findlay's world. Presiding Officer, the finance secretary has 24 hours before he delivers his budget. He has 24 hours to think again. If he wants Scotland to succeed, if he wants our economy to grow and to prosper, if he wants to raise the money that we all want to fund our vital public services, then we need to have a Scotland that is competitive within the United Kingdom and we need to be clear that Scottish families and Scottish businesses are not taxed more highly within the rest of the United Kingdom. That is the point that is made in our motion today, and I have pleasure in moving it. As my colleague the finance secretary has made clear previously in this chamber, the Scottish Government will confirm its tax proposals in its draft budget, which will be published tomorrow. However, while it is not wanting to pre-empt the finance secretary's draft budget, I welcome the opportunity to discuss the important new tax powers and how they may be best used for the benefit of Scotland's people and our economy. I will also challenge the premise of the Tory's simplistic argument, if I may say so, and its damaging narrative, which harms Scotland's interests. For the Tories, they are failing to sell the strength of Scotland's offer for individuals, families and businesses. The new income tax powers will be the most significant act of tax devolution to date, but the Scottish Government approaches them from the experience of a successful commencement of land and buildings transaction tax and Scottish landfill tax and operation of non-domestic rates and reform to local taxes. In preparation for the devolution of the fully devolved taxes under the Scotland Act 2012, the then Cabinet Secretary for Finance, Economy and Sustainable Growth, John Swinney, set out to this chamber a Scottish approach to taxation. That approach is founded on four core Adam Smith principles, that taxation should be certain, convenient, efficient and proportionate to the ability to pay. Alongside that, a commitment to taking a collaborative approach to tax policy development and a robust approach to tackling tax avoidance where we have the powers to do so. Crucially, we are sought to use those new powers on tax to make a difference for Scotland. We pioneered a progressive approach in the UK to the setting of rates and bands for LBTT with the amount paid more closely related to the value of the property or transaction and therefore to the ability of individuals to pay. We have used opportunities to make Scottish landfill tax more effective in tackling the wasteful disposal of resources, supporting our goals for a circular economy. As set out in the programme for government, we proposed to reduce air passenger duty by 50 per cent by the end of the Parliament and then abolish it when public finance is permit to address the most expensive tax of its kind anywhere in Europe, which continues to act as a barrier to Scotland's ability to secure new, more efficient, direct international services and to maintain existing ones briefly. Willie Rennie. The minister is rightly parading the new powers that are coming to the Scottish Parliament. Why is he increasing the unfair council tax that he has had since 1999 and increasing income tax that he has just got? What is the point of parading it if you do not use the powers? Minister. I will turn to council tax later and hopefully Willie Rennie will pick up on those points, but income tax powers alone will account for funding of over a third of the Scottish budget and as such must be used responsibly. However, we maintain that using the powers responsibly may mean being prudent in doing so and I will expand on that. As we all know, the current fiscal climate is challenging for the UK Government continuing its counterproductive austerity approach, hurting those on low incomes, growing inequality and stifling economic growth, and the EU referendum's and subsequent paralysis of a divided UK Government is delivering economic uncertainty and harming the confidence of Scottish and UK businesses. However, in the most challenging of times, the Scottish economy has shown resilience and in the first half of 2016, prior to the EU referendum, the Scottish economy continued to grow in the face of on-going external headwinds associated with weak global growth and the impacts of lower oil prices on the oil and gas sector and its supply chain. Indeed, in the three months leading up to the EU referendum, Scotland's economy grew by 0.4 per cent, the highest rate of coarsely growth since the start of 2015. However, we aspire to strengthen Scotland's economic performance and are not complacent about the task that we face and therefore need to ensure that we are setting income tax rates and bans and wider package of revenues in such a way that they work to the benefit of the people and economy of Scotland. We set out in March and in the Scottish election campaign our intention to protect all low-income taxpayers and in proposed to do that by freezing the basic rate of income tax for the duration of this Parliament. Equally, we need to ensure the delivery of key public services is protected and continue to serve the needs of the people of Scotland and I will turn to that later. I am running short of time I think but if the Presiding Officer will allow some time for interventions that would be great for me. I am very grateful to the minister for giving away. Does he agree with the basic proposition by the former First Minister Alex Salmond and Andrew Wilson, who chairs the Scottish Government's growth commission that if you lower taxes and stimulate the economy you can increase your tax take? Does he believe that? Paul Wheelhouse. I am trying to set out our understanding of that very point that by looking at the package of tax and revenues across the Scottish economy, we can have a more competitive economy and I would just encourage Moral Fraser to pick up on the points that we need to make. If we are also proposing to prioritise revenues and the protection of public services ahead of Westminster's path, instead of Westminster's path of offering substantial tax cuts for those who least need one. With regard to our existing powers, we remain committed to competitive business rates, a key part of our package to support enterprise, giving Scotland the most competitive business rates in the UK for a vital SME base. The small business bonus scheme has already saved businesses over £1 billion cumulatively as it is out of business rates altogether. Further proposals for 2017 will be confirmed by the cabinet secretary tomorrow, taking account of their evaluation, while an external review under Ken Barkley is exploring how rates might better reflect economic conditions and support investment and growth, and we will respond swiftly when that reports in the summer. Our reforms to council tax that build on the recommendations of the cross-party and cross-government commission in local tax reform will protect household incomes, make local taxation fairer and ensure that local authorities continue to be properly funded while becoming more accountable. After those reforms, if I'm struggling now with time, if a member can be brief please. I'll be very brief. Would he care to reflect on the very first recommendation of the commission that he referred to, which was to abolish the council tax? I'll turn to the reasons why we have done this, but the commission on local tax reform will protect household incomes, make local taxation fairer and ensure that local authorities continue to reflect on those reforms and that the present rates of council tax charges for all properties will still, on average, remain less than the equivalent in England, and that contributes to making Scotland an attractive place to live. It remains our view that it's disappointing that when considering the legislation to reform council tax last month, Parliament failed to support steps to ensure that any future reforms are based on the principle of fair and progressive taxation, but the Government will remain committed to those reforms are the first steps of a journey of reform. Our direction is clear and we remain open to engaging with others as we work towards living fairer and more progressive local taxation for the longer term. Presiding Officer, I challenge the premise of the Tories case on two key counts. First, it implies in framing of their motion that it is a bad thing to vary individual rates for bans in developing a revenue package that is designed to suit Scotland's needs. Secondly, crucially, I want to highlight that taxation, whatever tax rate we refer to as a digital tax for business rates, is only, as Willie Rennie pointed out, only one side of the equation. The Scottish Government delivers and invests in quality public services, which includes free childcare, moving to deliver 1,140 hours per child, free prescriptions, free undergraduate tuition fees, free personal and nursing care for those who need it, among other things, such as investing in energy efficiency of our housing stock, investing in our health service, maintaining police officer numbers. When all of those and more factors are extremely attractive and a good value place to live and work. The Tories focussed on modest differences as Patrick Harvie identified in the starting point for those paying the upper rate of income tax fails to see the context of a broader contract with families and businesses, where all potentially benefit from the same policies that deliver better services, greater wellbeing for all who live here, for employers and their employees, their parents, their children and indeed their customers. For by delivering on inclusive growth, the evidence tells us may not only reduce inequality, but we strengthen the competitiveness of our economy too. Other parties will no doubt take a different view, and in my last moments I'm sorry Mr Harvie, other parties will no doubt take a different view on how these tax powers can be used and we respect that, but they have the luxury of not having to live with the consequences of their actions, they don't have to choose what public service is to cut because they aren't proposing to raise tax revenues or they don't have to live with the long-term consequences of undermining the competitiveness of a place to live and work. We believe that we have that balance right and these policies will be at the heart of the draft budget tomorrow. I move the amendment in the name of Derek Mackay. Thank you, and I call on Kezia Dugdale to speak to you and move amendment to her name. Thank you, Presiding Officer, and I move the motion in the amendment in my name. Welcome the opportunity to talk about taxes afternoon and thank the Tories for bringing it to the chamber. I also thank them for the simplicity of their motion because I think it's a chance to talk about what motivates you, what your priorities are. Isn't it interesting that the Tories always start with the money? The motion says that the Parliament believes that families and businesses in Scotland should not be taxed more than those elsewhere in the United Kingdom, but surely they'd never dream of tabling a motion that says that the Parliament believes that public services in Scotland shouldn't be any better than those elsewhere in the United Kingdom. That's really the crux of this matter. If we want to protect our valued public services, we have to talk about how we pay for them, who pays for them. I'm a democratic socialist. I believe in the power of government to transform people's life chances. I believe that there's nothing inevitable about poverty. I believe that we don't have to accept inequality. My vision for Scotland is one awash with universal high quality public services that everyone invests in and everyone pays their fair share. I believe in this Parliament. It's been a feature of my whole adult life, but it came to being in my formative years. I was 15 in 1997 when Labour won the general election, 16 when the referendum that created this place took place, and 17 when its doors opened. I have always believed in this place as a means to take its own decisions for Scotland in the best interests and if you don't accept that, then you don't believe in devolution at all. Esterity is hurting Scotland and the poorest are hurting the most. I see that across the region that I represent. A mum working three part-time jobs, two of them on zero-hour contracts with no security about her finances from one week to the next. Her bus fares and train fares going up but her wages have been frozen. I see the cuts to the councils and the community take away the breakfast clubs that help her get to that job or to those jobs. I see cuts to colleges that took her chance of getting on in life away from her. I see the cuts take away the care of the tenement in her stair that is diminished in the quality of our local community, the grass is overgrown, that sense of pride in the community deflate it. I see her worry about the care that our mum gets when it comes to social care at home with 15 minute visits. I see her local library being closed and that one place you could take our kids for free disappearing altogether. It doesn't have to be this way. We can choose to do things differently. If you don't mind me just making a bit more progress, we have substantial tax powers to make different choices from the Tories. It doesn't have to be this way. I know we'll hear from Derek Mackay tomorrow and he'll tell us that Scotland's budget is going down. It's been years where he's had the ability to blame somebody else, somewhere else, for the cuts that his Government has had to make, but tomorrow the responsibility for those cuts will be his. Labour has outlined why it doesn't have to be this way, why there doesn't have to be any further cuts to public services if we are bold enough to use the tax powers of this Parliament. Patrick Harvie. I'm grateful to Keis Dugdale for giving way. Just so that I understand the intention of the Labour amendment, Keisie Dugdale knows that some of us would like to go further than 50p on the additional top rate of income tax. Is her intention to signal a direction of travel or an implacable attachment just to that one figure? Does she seek to keep with her in this amendment those who would like to go further? Keisie Dugdale. Very much my intention to work with the Greens as closely as we possibly can when it comes to the issue of progressive taxes. We named 50p in our motion today because that was the platform that we put to the electorate in May and a platform that the Labour Party intends to stick to. When we talk about progressive taxes and the member talks about progressive taxes we are talking about asking those with the broadest shoulders to pay more tax not tinkering around the edges that we've seen from this existing SNP Government. I say to Derek Mackay that he can choose not to follow our plan but that is his choice and every single cut that comes tomorrow in communities across Scotland will be an SNP cut and that's the responsibility that he bears. Mr Briggs. Miles Briggs. I've listened to what the member's had to say. How does she then square the fact that she supported council tax changes which is going to see the city we represent have over £38 million taken away from it by 2021 to help fund schools which we both want to see refurbished and rebuilt? How does she square that? Actually, if you look at the detail of our local government taxation proposals those people living in band A to band D properties will save money because of the platform that we're putting forward. We're actually advocating to help those in the poorest communities. It's something that the Tories would learn from quite substantially in the two minutes that I have left if I can just make another wider principle point about the Tories' attitudes to taxation. In built in that motion is the suggestion that higher taxes would be anti-business. I would refer Murdo Fraser to a tweet that Stephen Boyd just put out where he has published a table of income tax rates across countries around the world that show substantially higher income tax rates in countries with economies that are very prosperous and booming far more so than Scotland or indeed the UK economy. I would take that on in principle but also in practice as well. I spend a lot of time travelling the country talking to businesses and business leaders about their concerns. It's fair to say that their priority concern is always instability. They worry about Brexit. They worry even more so about a second independence referendum. But after you get past those constitutional questions what they tell me they worry about more is skills. They want skills and a skilled workforce for the future. The reality is that in this city many of the jobs that people in poor communities do will either go to low-skilled work. We have to invest in our people. The means by which we do that is to invest in education. That is why I take the chamber to our amendment, which advocates a 50p top rate of tax. Quite frankly, I don't know where the SNP sits on this. I've heard Nicola Sturgeon say that she supports it in principle. I've heard her say that rather than it be radical it's reckless, rather than it's daring and it's daft, I've no time left. What she can't avoid is the fact that the SCUC remarked on how hugely it was to see a party that parades as a party of the left abandon a serious opportunity to advocate progressive taxes that would make a difference. To conclude with a simplicity, this is ultimately about fairness. I pay less as a percentage of my income in tax than I did when the Tories came into power in 2010. I pay less tax now and I come to this chamber to seek to represent people in the poorest communities who are suffering from the cuts that his Government and his party are making. To conclude, the way to do this is to vote for a 50p top rate of tax and I move the amendment in my name. Can I remind people that we are so tight for time that anyone who goes over time will be coming off speakers from their own group? Very, very tight. Patrick Harvie, please no more than seven minutes to speak to you and move amendment 3063.4. Thank you very much, Deputy Presiding Officer. Can I most sincerely welcome the debate that we are having today and thank the Conservatives for bringing it? I am laying that on thick because it might be the only nice thing I have to say about the Conservatives for the rest of the afternoon, but in the context of a constrained budget process, we have less time and depths in which to scrutinise the budget this year than we should have as we all are aware, I think it is welcome that we have this additional debate the day before the budget itself is published. However, the Conservatives motion itself appears to me to assert a point of principle that people in Scotland shouldn't pay more tax than in the rest of the UK. It seems to me that if that is being put forward as a point of principle it is absolute absurdity. If that principle applies then there is an equally there must be an equally strong principle applying south of the border that people in England shouldn't pay any more tax than people in Scotland or in Wales or in Northern Ireland. In essence, they are arguing against the devolution of tax powers that they themselves have voted for. The current framework, I would say, is far from perfect, but it does allow the Scottish Government, the Welsh Assembly, the Northern Irish Assembly and the UK Government respectively to make tax decisions for Scotland, Wales, Northern Ireland and England. The Tories are involved in designing this system so they cannot now credibly demand that the different jurisdictions shouldn't be allowed to use the powers that they've been given. I wonder if the Tories have reverted back to their position pre-1997 when they argued for a no-no vote not just no to a Scottish Parliament but no to any form of tax powers either. I thought the Conservatives had acknowledged since then that they got that one wrong. I happily give way. With all respect, I think that Mr Harvey has been a little bit silly in this debate. Surely the point is that we now have a choice. We can make different choices. The choice that we think, on this side of the chamber, we should make is not to have taxes higher in Scotland than elsewhere in the UK. It is open to other parties to put forward their choices. Surely that's a healthy thing. I absolutely welcome the fact that we have this debate, but if we take the logic that the Conservatives have to offer through the laughable laffer curve and all of the arguments that we've heard from Murdo Fraser on that, then no jurisdiction within the UK would think it permissible or advisable to have a higher tax take than any other part of the UK. Essentially, a locked-in race to the bottom is the logic that Murdo Fraser is arguing for. They won't support any additional revenue generation which means that they are supporting every single penny of the cuts that the chancellor has in store from now till the end of this Parliament. To hear Murdo lauding the wisdom and judgment of Alex Salmond, something I have to say I would never do in the way that we just heard a few minutes ago simply underlines the absurdity of his position. The SNP's plans involve a very modest increase in revenues and it now appears that, in the light of increases in inflation which everybody is predicting that increase in revenues may be eroded it may be less than even the SNP have been predicting. So they too, if they are unwilling to shift from that manifesto position that was written many, many months ago if they are unwilling to shift from that position will bear responsibility for the bulk of the cuts that are to come in particular those at local government level. I remind Mr Wheelhouse that it is not only the party in government in this chamber that has to live with the consequences of decisions that are taken here. Everybody in Scotland will be living with the consequences and local councillors, our colleagues in every political party across Scotland will be living with the consequences of local government budgets that have been predicted under SNP plans to date. The other three political parties in the chamber have all proposed ways of raising additional revenue beyond that which the SNP has put forward. I think that we have done that with varying degrees of fairness varying degrees of redistribution resulting from the different policies and that comes onto my third point. Beyond tax principles and beyond tax principles, there is no use to come. There is no need for progressive taxation as well. The UK Government's budget has had a deeply regressive effect. It takes significant amounts of income away from the poorest third of society and those are the people whose pockets are being picked by the UK Government. The poorest third in our society will be significantly worse off not just as a result of tax but also benefit changes. There are very minor adjustments to that from the autumn budget statement. It will not reverse that impact. Meanwhile, it will give a significant increase to the income of the richest third in society. Everybody earning above the higher rate threshold for example will be £178 a year better off. That is partly due to the change in the personal allowance and partly due to the change in the higher rate. That is 15 quid a month in the pocket of companies such as our own such as MSPs and Cabinet secretaries to whom that will make no difference at all in the quality of our lines but it could make a massive difference even that modest sum of money to many of the people who are struggling to get by. The Scottish Government does have the ability if it changes course to recoup some of that to make sure that higher rate taxpayers do not get that benefit not just from the higher rate threshold but from the higher allowance as well. If they use the higher rate they can recoup that from wealthy people and generate revenues that are needed for the public services that people, in particular the poorest people in our society, depend upon. Those people will face worse to come in the years ahead unless we act. It would be scandalous, I believe, particularly at this season as we are all preparing for our cosy Christmases on our high salaries while others are struggling to get by and facing that festive season with nothing. It would be scandalous if we do not take action with the powers that we now have to redress the injustice that has been done to date. I look forward to hearing the case for the other amendments. I do not have time to address them but I say again that if we do not see some compromise from the Scottish Government then I regret to say that we will have failed in an historic opportunity that we have before us. I call Willie Rennie to speak to and move amendment 3 or sets 3.2. No more than seven minutes, please. Thank you, Deputy Presiding Officer. I like Murdo Fraser. He knows he knows I do, I do, I do. He knows that I do not agree with him on an awful lot but I think he can be an effective spokesperson for the Conservatives on finance. He is blushing, isn't he? I have got him. I believe that he is just as good as Philip Hammond if not better than Philip Hammond. I cannot believe why Murdo Fraser is saying that Philip Hammond should set Scottish income tax policy. Such low self-esteem in a man who normally is not short of such confidence is a great surprise. Murdo Fraser should have more confidence in his own ability. I am in favour of a United Kingdom with power that is shared to enable us to reflect the wide and varied nation in which we live. I believe in a federal United Kingdom. That is why I reject the Conservative position that we should have nothing different in Scotland. Nothing should be decided here. Everything should be determined by the Conservative Chancellor in the House of Commons. It is a throwback to the 1990s position of being anti-divolution. Everything must be the same across the United Kingdom. It is worse than that. The Conservative Chancellor will set Scottish income tax policy, yet he will have absolutely no responsibility for the consequences of that decision. He will set the policy. We will blindly follow that policy and we will feel the pain if it all goes wrong. I believe that that is an abdication of responsibility and that is why I reject the Conservative motion today. The second flaw in the Conservative argument is that all tax increases are negative and have no benefit for the economy. That seems to be what they are arguing. Listening to the Conservatives, you would think that the only way to boost the economy is to cut tax. I do favour cutting taxes to credit for the increase in the tax thresholds that only the Liberal Democrats had in our manifesto in 2010. He took credit for that because he was right to cut taxes for those on low and middle incomes to take them out of the tax to make it fair. That was the right thing to do, but we did it on the basis of making it fair rather than a right-wing agenda to reduce the size of the state. I do not believe that all tax is bad. Taxes pay for the public services that we all value and taxes pay for the services that help to boost the economy as well. Liberal Democrats believe that income tax should be raised by a modest one penny to invest £500 million into nursery schools and colleges. That small increase for a big return has a clear purpose. We have just seen within the last two weeks the catastrophic consequences of a failure to direct Scottish education in the right way. We used to have one of the best education systems in the world, but now it is clear according to PISA that we are now just average. Now is the time that we have got these new powers coming down the track yet we fail to use them. I think that that would be a failure of our responsibility as well. To just say that we have to match the rest of the United Kingdom of income tax and forget about the other side of the equation. Forget about the boost to education that we require. A boost to education that will move us from just average education to top quality education and move it from just an average economy to a top quality economy as well. That is why I want that change to happen. I will give way to my favourite politician. I will try to avoid blushing any more. Mr Rennie makes an interesting case on education. We do not like just to reflect for a moment on the fact that education per head of people in England is far less well funded than it is in Scotland and yet results in England are surpassing those in Scotland. Is it there for an issue broader than resources that we need to address? Willie Rennie. It is a wider package of measures but clearly the challenges in Scotland are greater. That is why I believe that we need to have the investment to match that. It is quite clear that Scottish education authorities are struggling with the finances that they have. We have seen drastic cuts to schools. We need to make that difference to close the attainment gap and to deny that is to deny reality as well. Moving on to my final argument which is one about the Conservatives presenting themselves as a low tax party but forgetting about all the stealth taxis that they are proposing to introduce. To be fair, they want lower income taxis but equally they support a number of other more regressive stealth taxis. Look at the council tax in England. It is going up by up to 6 per cent over the next two years. Perhaps employers would have something to say as well about the increase in national insurance contributions from those earning £45,000 just below that level. It is going to be a big increase of roughly £200 for somebody on £45,000. A proposal from the Conservative Party not something that they boast about. The apprenticeship levy, not additional funding for training but a replacement of the funding that we already have. Prescription charges, tuition fees that they are desperate in Scotland's stealth taxis rather than being open and upfront and transparent and progressive which is what income tax is about. My proposal is that we should reject the Conservatives' throwback to the 1990s. Ruth Davidson, political hero, is John Major. He was in favour famously or infamously of 22 Tory tax rises. Those from that era will remember those stealth taxis. He was bootied out of office immediately after he proposed those stealth taxis. We have heard today that the Conservatives just want us to blindly follow what the Chancellor in London wants to do as well. An anti-devolution stance. They are also rejecting the proposal that we should invest in our economy through investing in education. That is truly a Conservative party back to the 1990s. Not the moderate Conservative party that they would like to present. I move the amendment in my name. We now move to the open speeches very tight for time so no more than six minutes. Liam Kerr to be followed by Kate Forbes. Thank you, Presiding Officer. Einstein said that the hardest thing to understand in the world is income tax. Harder to understand is the logic of making Scotland the highest taxed part of the UK. Put bluntly, because in amongst all the stats and the facts and the caveats these are real people, real businesses, real families more money will come out of the pockets of hardworking people and families and businesses north of the border than south. I know the SNP needs money. Those pieces of figures aren't going to fix themselves. We know that they've wasted nearly £1 billion on department and project overspends. But can they tax us to prosperity? There are two ways to see that the answer to that is no. When George Osborne reduced the 50p tax rate to £45p it raised £8 billion extra for the Exchequer. The top 1% of earners now pay 28% of all income tax. Nicola Sturgeon said it would be reckless to go to a 50p tax rate and Derek Mackay agreed in a response to the autumn statement. That would lose money. Secondly, because as Andrew Wilson, the Economist who chairs the SNP's gross commission says, the best way to sustainably double revenue from the top bracket is to double the number of taxpayers in Scotland wealthy enough to pay it. Increase the tax base and you increase the tax take. No, not with the time constraint. The decision by the UK Government to raise the 40p threshold to 50,000 was taken because at present it unfairly targets senior teachers, policemen, nurses, entrepreneurs the very people we need to attract to Scotland. The chancellor was right when he said about internal migrants. Paying significantly higher taxes in Scotland will be a factor in their decisions about whether they want to come and make their careers in Scotland. A CBI survey shows two thirds of Scottish businesses expect to struggle to fill highly skilled vacancies. In NHS Grampian there are 36 consultant vacancies and 445 nursing and midwifery vacancies. There are 1,000 fewer teachers in Scotland today than in 2010. 16 fewer GPs in the Grampian area than in 2010. The courier reported this morning that Breakin has the most vacant shops in Scotland with a quarter now lying empty. So when an innovator, an entrepreneur, an investor has an idea for a business, will she locate it in Breakin, Burby, Banff where the Government will punish her for success or Newcastle, Norwich or Nottingham? And when a mid-senior nurse looks at where would be best to base himself for a successful career, will he choose Stonehaven where he can expect the Government to take 40p out of every pound he earns or Sunderland where he won't have to worry about that until earning at least £50,000? Simply put, there is no reason why someone doing the exact same job in Scotland as in England should pay more. It is not fair. Now look, I talked about the north-east. No, we need people in the north-east. And virtually every visit I go on, businesses say I cannot get people to move here because the cost of living is too high. Why? Because the north-east of Scotland is targeted for a council tax raid that sees half of all residents in towns like Inverury, Ellen and Westhill in modest family properties facing an increase to pay for services in the central belt. It is before their household water and sewerage charges rise 1.6 per cent. It is because of a large business supplement which puts, according to Liz Cameron of the Scottish Chambers of Commerce, today Scottish businesses had a competitive disadvantage to their counterparts in England and prices local people out of their high street. They mean an increase in land and buildings transaction tax, which has we've heard slowed the local market. They mean a £15 million per annum new water charge for businesses. The same individuals are about to see their colleagues in England and Wales benefit from a tax cut as the UK Government raises the tax threshold. They might as well put a sign on the A90 that says the north-east closed for business. Just yesterday in the economy committee, Dye Alexander Chair of the Scottish Rural Poverty Task Force said, if people save money on bills they put it in their pockets which they can spend on the local economy. He's right. Increase consumer spending and you increase VAT receipts. A 5 per cent growth in VAT above the UK gives an extra £250 million for Scottish public services. There is no practical reason to make Scotland the highest tax part of the UK. If you do, people will spend less. Prices will go up, people will leave, jobs remain unfilled, services suffer, tax take goes down and ultimately we all lose. Presiding Officer, families and businesses in Scotland should not be taxed more than those elsewhere in the UK. You do not raise money by endlessly taxing people more heavily. You do not make the wealthy shoulder more of the burden by punishing them but by encouraging them to generate more and to live and work here. It is unacceptable to demand that middle income earners shoulder ever more of the burden of running the state simply to pursue an ideological obsession. If this Government really backs progressive taxation, if they really want to promote aspiration, promote Scotland as a place to invest, to do business, to live, then they would be backing the UK Government's plan to increase the 40p tax threshold. But they aren't. That, my friends, tells you all you need to know about this Scottish Government and its attitude to the hardworking people of Scotland. Kate Forbes to be followed by Jackie Baillie. Before I begin, let me just say that I'm the PLO to the Cabinet Secretary for Finance. Six minutes to speak on taxation, Presiding Officer, is a much nicer proposition than sitting through hours of tax exams and I speak from experience. As waves of political regimes have come and gone, altering and changing tax to suit and advance their political agendas, layers upon layers of tax legislation have built up into the exam subject of every poor trainee accountant's nightmare. But perhaps that's not as much of a nightmare as getting basic arithmetic embarrassingly wrong on the first pages of a public report like the one that Tories released this week, which told me less about Mackay's millions and more about how the Conservatives can't count. Which might be why they haven't counted how much a dual-earning couple with three children are set to loose under this UK Government according to the Resolution Foundation, which is over £3,000. So indulge me if I simplify tax for my own sake and for the Tories. For all the debate, a Government's tax policy is a window into the engine room of an administration and I'd argue that it shows you where they want to go, how they want to get there and why they're going in the first place. Let's just stop and think about who has actually moved on tax. It's not us, it's the Tories. They've increased the threshold to reduce the tax burden on the highest earners and we will certainly not be following where the Tories have gone. I would. Patrick Harvie. I'm interested by that point. The Conservatives at UK Government level are certainly proposing to increase the higher rate threshold more, to increase it somewhat. What's the rationale for doing that when it still represents a tax cut to high earners? Kate Forbes. The basic answer is inflation. We are not moving it except for in line with inflation, which makes perfect economic sense to me. But neither are the majority of Scottish voters following where the Tories have gone as they delivered a resounding verdict on the Tories' tax plans in the elections by returning a third SNP Government. I'm really limited to that. That there should be tax differences between Scotland and the rest of the UK should hardly come as a surprise. In fact, the Conservatives have had since November 2014 to adjust to the notion of devolution of tax powers when the Smith commission recommended that this Parliament should have the power to set taxes. In fact, they've had even longer since 2010 to adjust to the idea that their Westminster colleagues believe that the inheritance tax cuts for millionaires and those comfortably living in higher tax brackets. Since 2010, the only income tax rate that the Conservatives have cut is the additional rate from 50p to 45p. I told you tax was a window into political priorities. The resolution foundation estimates that Tory policies announced since the 2015 election mean that the poorest 10 per cent of households will lose on average £400 a year, whilst those in the richest 10 per cent of households will gain around £200 a year by 2020-21. There's also a subtle hypocrisy in the Tories' outrage and accusations. Firstly, they are, of course, as Willie Rennie has pointed out, the party of hidden taxes. They tax the sick with prescription charges, they tax emergency services with different VAT arrangements, they tax learning with university fees. If you want to talk about economic growth, that's absolutely fine. So do I, with one additional word, and that is sustainable. Sustainable economic growth, not growth that widens the gap or growth that entrenches poverty or growth of the bank balances of a handful. Let me quote Helen Barnard again from the Joseph Rowntree foundation. The UK economy is not working for low-income families. The economy has been growing since 2010, but during this time, high rents, low wages and cuts to working-age benefits mean that many families, including working households, have actually seen their risk of poverty grow. That's two types of growth. The second hypocrisy is that the UK Government claimed to support businesses. All businesses are just big global businesses. They can't even provide certainty around the single market right now. For all their talk about lower income and corporation taxes, the Westminster Government goes nowhere near supporting businesses like this Government does, particularly small and medium-sized businesses that are the backbone of Scottish society. We've promised to expand the small business bonus scheme and lift 100,000 properties out of rates altogether. The thing is, if I learned anything in those painful tax exams, is that tax is only ever one side of the balance sheet and we can choose what goes on the other side. Not that there is another side to this motion, it is, as Kezia Dugdale said, only concerned with money. But this nation now has the powers to turn the tide of the Tories regime in Westminster and that is precisely what we intend to do. Jackie Baillie, followed by Ivan McKee. At the heart of this debate is the very essence of the devolution settlement. This Parliament was created to reflect the views of the people of Scotland to bring decision making closer to whom. A democratic Parliament with a voice to shape Scotland and a voice for the future. A Parliament now with more power than we have ever had before and nowhere is that more evident than our new financial arrangements. Because now is the time for real grown-up politics. We are no longer just spending the money that somebody else gives us, we have responsibility for raising much of that money too. Balancing our budget just got much more complicated. But these are our choices to make. There is no-one else to blame. Politics after all is all about choices. The SNP Government tomorrow will set out their choices. Their budget is likely to be an austerity budget. Passing on Tory cuts instead of using their new powers to invest in the future of our country. But I live in hope that I am wrong although I am not holding my breath. I look forward to that and I will hold the Cabinet Secretary to account on that. When we voted to establish the Parliament we voted for it to have new powers. I know that the Tories campaigned against devolution. It might be uncomfortable to remind them of that. Devolution was about doing things differently if we chose to do so. Scottish solutions for Scottish problems was the mantra of the day but the premise of the Tory motion before us is that everything must stay the same. We need to choke on their austerity plans and not do anything to help the poorest in our society or the jams about managing. We have not to have better public services. We have not to aspire to do more. I remember that the Tories set two fiscal rules under their former chancellor. They failed to meet either of them. So what does the new chancellor do? He simply replaces them with easier targets. Disappointing but hardly surprising. You get it? Martel Fraser? Very grateful to Jackie Baillie for giving way. She knows Jeremy Corbyn supports the Tory chancellor's increase in the threshold for the 40% rate. Does she also think that Jeremy Corbyn is too right-wing? Jackie Baillie? That is certainly not what I think but can I just say to you he would respect devolution. It's about time the Tories did too. The bare-faced cheek on the part of the Tories is quite astonishing. Given that the cut to the Scottish budget shows this year a 3.5% real terms decrease expected to be a cut in the order of over a billion pounds over the course of the Parliament. The Tories may be content to pursue austerity policies hurting working people and families across the country but it's really audacious to suggest that air passenger duty is cut. A tax cut for frequent flyers and in that they join with the SNP tax payers alliance because they want to do the same thing but you need to tell us what you will cut due to the loss of revenue. Let me turn to the Scottish Government. I'm disappointed that the SNP talk about being progressive but don't act that way. Here's the opportunity to end austerity to stop the cuts to make different ideological choices to the Tories and I don't have time. I'm an eternal optimist and I hope that Derek Mackay steps out of John Swinney's shadow and refuses to be a conveyor belt for Tory cuts. I hope that we see boldness and leadership rather than the SNP meekly following the path set out for them by the Tories. If the SNP were growing the economy and growing the tax base I might have more sympathy but the truth is the economy is stagnating virtually all forecasters have downgraded their forecast for economic growth. The rate of growth in Scotland lessened that in the rest of UK is a range of economic indicators. We've missed our productivity target we're likely to miss our export target today we find that economic inactivity is rising yet again and a key determinant of future revenues is of course wages. It must be very worrying for the Cabinet Secretary that wage growth has slowed and is less than the rest of the UK. Presiding Officer the greatest investment you can make in growing the economy and its people. The better skilled better educated the higher paid is the workforce. That's why we want a 50p top rate of tax for those lucky enough to earn over £150,000 every penny raised to be invested in education so we can start to build that economy of the future. Let me say to the SNP they will unveil their budget tomorrow. This is Derek Mackay's first budget as finance minister. Will his approach grow the economy and public services or will he follow in the footsteps of John Swinney and Slash and Byrn? Let me remind the chamber that the finance minister has formed in Renfrewshire Council when he was the leader there for four years he cut and cut and cut again over £5 million in education cuts cuts to teachers, cuts to classroom assistants, cuts to pre-five education cuts to school transport similar range of cuts in social care in fact six pages of cuts from Derek Mackay when he was the leader of Renfrewshire Council but let me say to him it's not too late Derek Mackay does not need to be screwed at Christmas he has a choice he can bring forward an anti austerity budget a progressive budget that helps all of Scotland but if he brings forward a budget of cuts then make no mistake those won't be Tory cuts those will be SNP cuts and tomorrow will be interesting indeed Ivan McKee followed by Alison Harris Thank you before I begin I'd just like to remind the Parliament of my role as the parliamentary liaison officer to the Cabinet Secretary for the Economy, Jobs and Fair Work I'm delighted to take part in this Conservative Party debate today that is headlined as being about taxation but in reality is about something else and over the coming weeks we'll have the opportunity to debate Scotland's budget the various parties in this place will repeat off-use lines, manifesto commitments and policies many will also do so today but this afternoon I want to focus on the issue that lies at the root of this Tory motion because this motion doesn't seek a debate on taxation it doesn't challenge taxation decisions made by this Government it doesn't attempt to comment on the programme for government that SNP was elected on in her manifesto and it doesn't propose alternative tax policies and argue for their adoption it simply states that Scottish taxation policy should be no higher than elsewhere in the UK and in doing so it advances the proposition that Scottish taxation policy should be tied to the taxation priorities and policies of the UK Government and whatever we decide to do in Scotland should be constrained by Tory policies in Westminster it seeks to remove from our Scottish Parliament the flexibility to raise more where it makes sense and to incentivise where needed it seeks to undermine the concept of a distinctly Scottish approach to taxation it seeks to constrain the ability of this Parliament, the Scottish Parliament to decide upon and to implement taxation policies in Scotland distinct from those at Westminster because in their hearts the Tories have no interest in a distinctly Scottish approach to taxation Scotland through the ballot box has made its views clear giving this Government the mandate to forge a different Scottish path in Scotland 100,000 small businesses benefit from the small business bonus part of a distinctly Scottish approach to taxation we see council tax bills in Scotland lower than the rest of the UK and now with higher value properties carrying more of the burden than is the case in the south part of a distinctly Scottish approach to taxation Neil Findlay mentions the small business bonus whether Mr McKee is aware of any analysis that has been done of the benefit of the small business bonus that he could share with the chamber Ivan McKee I have talked to many small businesses and my constituents who are very grateful for the small businesses Mr Findlay advocating that that is not a benefit to those businesses we see a commitment to raising the threshold at the start of taxation above that plan by Westminster pulling more lower paid donors into the taxation system than will be the case in the rest of the UK we see a shift in the thresholds for higher rate taxpayers generating an extra £1.2 billion for public spending in Scotland over the lifetime of this Parliament we see a different approach to property transaction taxes giving support to first time buyers and shifting the burden to the top 7% of transaction all of that and more part of the move towards a distinctly Scottish system of taxation that is being tied to the tax policies of another Parliament and another place Presiding Officer, the current devolution settlement limits our fiscal policy in so many ways it denies us the ability for example to decide on co-operation tax rates for Scottish businesses preventing us from raising funds for investment where appropriate are providing focused support to businesses where needed it prevents us from designing taxation policies to support our industries it denies us the opportunity to vary rates of national insurance for employees or employers alike whether to incentivise job creation or to support extra investment in public services it even denies us the power to define income preventing us from legislating for tax on savings and constraining our ability to coordinate income tax with dividend tax severely restricting our ability to shift the tax burden to top earners in short the tax power we enjoy are limited partial and far from what is necessary to enable us to drive forward our economy and the best interests of the people and businesses of Scotland but even those limited taxation powers are too much for the Tories the Tories through this motion show their true colours laid bare as their desire to constrain the powers of this place never mind developing taxation policies specific for the needs for your needs and priorities Scotland just go back to eating your cereal and leave their hard sums to somebody else that presiding officer why the party opposite will never occupy these benches because the people of Scotland understand that their commitment to devolution their commitment to standing up for Scotland is only skin deep the Conservative and Unionist party imagine and I know it's difficult but just imagine Ruth Davidson and Murdo Fraser drafting a Scottish budget the hotline to number 11 the hotline to number 11 ringing off the hook North Britain Tories less autonomous leaving the branch office permission sought for every dot and comma every policy run through the treasury subject to a veto from their Westminster masters we should not be surprised this from the party that opposed devolution from the outset the party that stood against additional powers every step of the way the party that drew lines in the sand and stood firm like King Canute against giving more responsibility to the people of Scotland until the waves of Scottish public opinion they exposed the Tories unwilling to trust the people of Scotland to make fiscal decisions for themselves and the people of Scotland in return unwilling to trust the Tories to have their best interests at heart vote for the amendment in the name of Derek Mackay and reject this Tory motion thank you Alison Harris followed by John Mason thank you as a chartered accountant in my life before I entered this Parliament I know very well the consequences of increased costs of business and the effect that these have on the ability of business to create jobs and prosperity and as a working mother I am very well aware of the stresses of increased demands on family budgets Deputy Presiding Officer this government is taking decisions that are damaging to both business and to families and my fear is that unless they drop their anti-business agenda the situation is only going to get worse business must be competitive and able to compete on a level playing field compared to other parts of the UK how does Scotland's economy fare under the SNP growth in GDP barely half of that of the rest of the UK business confidence lower than other parts of the UK inward investment falling by almost 10% in 2015-16 whilst in the rest of the UK it rose by over 11% financial services while to quote the director of the institute for public policy research in Scotland the finance committee on 16 November in the financial services sector we have seen the withdrawal of high skilled jobs from Scotland to elsewhere in the UK retail sales falling earning the comment from the director of the Scottish retail consortium that the SNP needed to keep a firm grip on personal tax rates and only last weekend a major Scottish newspaper was reporting that Scottish businesses are in limbo and putting investment plans on hold as they nervously await possible tax hikes in 2017 tax hikes, not from Westminster but from homegrown tax hikes conceived and hatched here in Scotland by the SNP new provisional levels of business rates will do nothing for the competitiveness of Scottish companies property consultancy, JLL have warned that these changes will be too short for time sorry these changes will extend the competitive disadvantages between businesses in Scotland and the rest of the UK David Burke, director of the rating at JLL, is quoted as saying if Scotland wants to restore a competitive position it must at least match England and Wales by cutting the non-domestic rate poundage will the government listen to this expert advice I swapped out we shall know next month but I for one will not be holding my breath the First Minister recently visited Dublin well I hope she heard how low tax rates have helped transform the Irish economy the current world trend to reduce corporation tax underlies the importance that governments of all persuasions see in stimulating businesses I'm sorry I can't, I'm too short businesses and driving economies through tax Scotland cannot ignore these trends and become ever more uncompetitive for business but in many areas this is exactly the message that the SNP are sending out and business is listening with alarm is it any wonder that business start-ups lag behind any other areas in the UK and companies that at one time would have registered here in Scotland and been proud to help contribute to the Scottish economy are now registering in England after all for many England is the major market and differing tax rates are a huge concern to businesses especially in today's global marketplace now as an accountant I know the differences between tax regimes in Scotland and England will inevitably create complexity and additional cost for business it's good for accountants but bad for the creation of jobs and prosperity both of which come from successful businesses turning now to personal taxation the policy of the Scottish Government to freeze the higher rate tax threshold will lead to over 350,000 Scots with less take home pay than their peers doing the same job in England 130 million taken out of the pockets of hard working families by the SNP what message does that send to our skilled workers our economy needs to the dedicated senior teachers the nurses the doctors the police officers to those involved in medical research doing fantastic work to find drugs to eliminate the scourge of cancer people with such expertise and skills that other countries are determined to attract many will perceive that Scotland does not value such people dismissed by the SNP is the better off and undeserving of the same incentives being given by the UK Government I'm sorry no I need to keep going Kenneth McEwen The next director at Henderson Logie wrote recently in the Scotsman of the risk of many of Scotland's top earners moving south hit by higher personal taxes higher household taxes with increased costs of the land and buildings transaction tax hitting many residential properties particularly in places such as here in Edinburgh increases in council tax hitting not only families in larger properties but those occupying homes in bands E and F so much for a Scotland that welcomes and nurtures the best and the brightest so much for keeping Scotland competitive will the government listen to the SNP economist Andrew Wilson on the need to incentivise people and when he reminded us that changes in the tax can lead to less revenue as is the case with the LBTT or will his be a lone voice well I'm glad to say that the message that my party is sending out is very clear that Scottish people should not be penalised by the actions of the SNP and should not pay more taxes than people living elsewhere in the UK I fully support this motion John Mason followed by Richard Leonard Well thank you I'm delighted to speak in this debate in taxation I'm also delighted to follow my fellow CA the only two of us I believe in this chamber but I have to say that my views are because I believe that taxation is a very good thing taxation is what makes our society civilised and contrasts us with the law of the jungle where the strong get stronger and the weaker abandoned because of taxation we have a national health service free school education roads, railways, police, ambulance fire services, army, navy, air force because of taxation we have a court system social work services and local services like parks and refuse collection the list could go on but I hope I've said enough to show that I am very enthusiastic about taxation on a personal level if you're thinking about buying a house you start by thinking how big it needs to be and where it should be you should not start by thinking how you can outdo your mates and show off how your house is better than theirs similarly at a national level when we talk about taxation our starting point should be what services do we want and need and therefore what level of taxation do we need our starting point should not be comparison with our neighbours even though I accept that that can be a relevant factor as our society has grown and developed we have wanted and need more public services care for the elderly and children is now seen as a shared societal responsibility not just a duty on an individual family so it seems logical to me that as our needs and demands increase so our level of taxation needs to increase to pay for these now to be fair to the Conservatives they do raise a valid point that we have to think how do our taxation levels compare to our neighbours if our taxation is higher and our public services are better then richer people may possibly leave as they need less public services and may not be willing to pay the tax so I accept we cannot ignore taxation levels in England Netherlands, the United States, Australia or other countries which might attract our people but having been on the finance committee previously there was fairly widespread agreement from the experts that a couple of percentage points difference in the tax rates between Scotland and England was unlikely to mean many people moving location of their home why do people choose to stay in Scotland come to Scotland and live in Scotland well there are many factors they have family close by the people, their jobs are here there are good public services be that schools, universities, the health service yes taxation can definitely be a factor but it seldom the main one similarly for businesses they will locate close to customers where there is an educated workforce good transport links again taxation will be a factor but only one amongst many I can hardly imagine Tesco or Debenham's will close down all their stores in Scotland and their profits after taxation are a few pounds lower Adam Tomkins it's very sad of course that the member is no longer a member of the finance committee so he won't be aware perhaps of the fact that the tax adviser to the finance committee gave evidence only last week to suggest that when Catalonia put up taxes 5,000 businesses moved from Barcelona to Madrid John Mason but then of course he missed being on the previous finance committee which heard that within the Swiss cantons rates of taxation and they're very close together and people do actually not move very much now as I suggested at the beginning being fixated on your neighbours is not a healthy state of mind of course we want to be aware of what the competition is doing we are interested in how the folk next door are decorating their house or what they're growing in their garden but keeping up with the Joneses is not a good mindset in my opinion it's a somewhat sad lifestyle choice when you think the quality of your life is based in comparison with others surely it's better when we choose to live in our own way in the way that we want and that we are comfortable with so are we actually very different in taxation from the rest of the UK no actually we're not we introduced LBTT and landfill tax which are somewhat better than but not dramatically different from the rest of the UK business rates are slightly different and income tax so far has been much the same so firstly let's not pretend we are hugely different from England I would suggest that the Tories are risking damaging Scotland by overemphasising the differences but then again maybe the Conservatives do not mind if they damage Scotland as long as they keep their beloved UK together now if you want my personal opinion yes I would like to go further in raising tax for better public services and also for a more equal society in the medium term I accept we can only go so far in the short term and the public have not shown a great appetite for tax increases we do live in a democracy so what the public says has to go but that will very quickly Kezia Dugdale Is the member aware that the most popular policy during the general election campaign was actually Labour's policy for a 50p top rate of tax John Mason For better or worse Labour did not do very well in the election now I'm going to run out of time here but on the actual tax I would like to make three issues I would like to combine income tax and national insurance in a much simpler overall system I would like to make the whole system then more progressive at the moment people start on 32 per cent that's 20 per cent income tax 12 per cent national insurance top rate is effectively 47 that's 45 plus 2 I do not think that is nearly progressive enough I would just return to my main point we face many challenges with the health of an ageing population we want to improve our young people's start in life dealing with all of those issues cost money and will cost money so if we are serious about improving lives in Scotland we have to be prepared to pay for it and the fairest way of doing that is through taxation thank you Richard Leonard to be followed by Stuart McMillan Thanks Deputy Presiding Officer this is a Conservative Party initiated debate and it was Ruth Davidson who said of her independent commission for competitive and fair taxation I quote we need to start thinking big as the new powers come to the Parliament we need to send out a big bold message through our political choices February 24 2015 and this one line motion is the result is this it this denial of devolution this negation of the right to be different to dare to be different to stand up to austerity to properly invest in public services properly invest in the economy this is not bold and big this is small minded and timorous yes Mr Lockhart we just make it clear our motion says families in Scotland should not be taxed more than elsewhere in the UK we are very happy for tax in Scotland to be lower than the rest of the UK well there we there we have it because it is part of an ideology which we should be familiar with once again the only industrial policy the only economic programme of the Conservative Party is a tax cut this is not a serious policy for jobs and growth it is a recipe for inequality and division it is a recipe for unemployment and disinvestment under the Tories we and I don't mean Scotland I mean the working people of the shared island we are part of an experiment it is an experiment in which we are wrenched out of the European Union plunged deeper into an ocean of austerity in which the currents are engineered to hit hardest to drag under the most vulnerable in our society the ones who are least able to bear it and not only does this fiscal imperative corrode the very threads of the social fabric which binds us together worse the dismal economics which sets out to redistribute the nation's wealth not from each according to their means to each according to their needs but from each according to their poverty to each according to their wealth it is an ideology which demands that the rich get richer and the poor get poorer modelled on a failed trickle down economics built on quicksand foundations of self-interest and selfism not strong foundations of social cohesion and solidarity so that is why the Labour Party is prepared to act because it's no good talking about the politics of anti-austerity or the construction of an anti-austerity alliance whilst in opposition when in government you must stand by those principles too and not simply pass austerity on and let me say this we didn't campaign all those years in the Labour and trades union movement and in wider civic Scotland through the Scottish Constitutional Convention to create a Scottish Parliament which would simply be a conveyor belt for Tory policies and Tory austerity quite the opposite we campaign for a Scottish Parliament to be a bullwalk against Tory policies a bullwalk against Tory austerity to find, as Jackie Baillie said Scottish solutions to Scottish problems now the SNP has said that it wants to forge its taxation policies according to the principles of Adam Smith but as the poverty alliance has pointed out in its briefing for this debate and I quote it is surprising that the principle suggested for Scottish taxation do not mention fairness will I agree with the poverty alliance and I ask the cabinet secretary what about the principles of equity the principle of equality of sacrifice I'll take an intervention cabinet secretary the member not reflect in that point that one of the principles is around proportionate to the ability to pay which is absolutely what we've followed on the new devolved taxes to Scotland Mr Leonard I support the principle that the proportion of income taken in tax should rise with income not be simply directly proportional these are some principles of fairness so our position the Labour position is distinctive for those earning over £150,000 a year this week we are not starting to consider a shadow budget based on normative principles I haven't got time I'm afraid Mr Simpson we are deciding on a real budget in which we can make positive choices so I say to members of this parliament from all parties we cannot turn our back on the homeless on our old age pensioners half of whom are living in fuel poverty this winter we cannot turn our back on people desperately looking for work with unemployment climbing again we cannot turn our back on the funding crisis in our national health service and the closure of services and on the hard working staff who deliver the service in the NHS because everyone should receive the best possible medical treatment free at the point of need neither can we turn our back on investment in our schools and colleges in our people because every young person has a vision to fulfil their potential so finally this is a battle of ideas it's a battle in which we are certainly on an opposite side to the Tories and I fear we may be on a different side to the SNP too so we will make our speeches and you may vote our amendment down but we will keep making these arguments because they are the right arguments and one day this minority in favour of them will become a majority justice real change that's what the Labour Party is arguing for this afternoon and we call on all good people of conscience inside and outside this Parliament to join with us thank you very much Mr Leonard I call Stuart McMillan we're followed by Ross Thompson Mr McMillan please thank you very much certainly with new powers in the way there's never been a better time to think about the type of Scotland and certainly it was noticeable that in Murdo Fraser's earlier comments that it didn't mention at all the issue of the small business bonus scheme which certainly has been hugely beneficial to over 100,000 small businesses in Scotland certainly for the SNP government this means tackling poverty and inequality and we believe that a fairer taxation system is certainly part of that and our income tax proposals for 2017-18 and beyond will protect lower income tax payers but also generate extra revenue for the best and key public services Tourism revenue is growing and it's becoming an increasingly important part to local economy in my constituency of Greenwick and Inverclyde and it's got the influence and the prevalence of jobs there now with the control of APD coming to the Scottish Parliament from 2018 the Tories have actually called for the tax to be abolished for all flights longer than 2,000 miles to incentivise airlines to provide new direct links from Scotland to the rest of the world and they have also called for an immediate freezing APD on short-haul flights to the UK and Europe yet this flies directly in the face of what the Tories are claiming during the Scottish Parliament election campaign earlier this year in their manifesto they actually wanted varying levels of APD to increase in price of longer distance flights so why the sudden change of heart have the Tories just the two seconds have the Tories suddenly come to their senses or is it just another case of flip-flopping like we have actually seen with Brexit Kelly? Thanks for taking the intervention Mr McMillan started his speech by speaking about tackling poverty and we've just heard Richard Leonard tell us that half of pensioners are suffering fuel poverty. How does cutting APD tackle that? Stuart McMillan If Mr Kelly wants to listen to this of speech then I'll put on to a few points that will address that. We are at the impact of tourism expenditure certainly could be between £56 million and £68 million a year resulting in between 1200 and 1500 additional jobs and £47 million and £58 million in GVA to the Scottish economy. Also in the last six months since the EU referendum there have been some clever arguments to make in ways in which we can actually try and mitigate the worst of the looming damage that will be inflicted on Brexit and help to actually stimulate the economy. Meanwhile the rest of the world looks on at the Tory's pan-to-mind politics all Brexit with being used perplexity and also irritation. As the Tory broken promises pile up the economic plan for the rest of this decade will have been laid out by Philip Harman at the Chancellor and equals austerity light but for even longer. We learned during his autumn statement that stagnant wages and following living standards to become that reality. Despite that the Tories have earmarked substantial funding for their white elephant projects. The total lifetime cost of the plant Henkly Sea nuclear power plant could be as high as £37 billion according to an assessment published by the UK Government. We have also heard certainly through the autumn statement that the overall cost of the high speed 2 project is increased from £50 billion to £56 billion and the renovation of the House of Parliament set to cost anywhere between £3.5 billion and £7 billion. Let's not forget in the attempt of the UK Treasury earlier on this year to cut Scotland's budget by over £7 billion in the fiscal framework negotiations. If it wasn't for the First Minister and John Swinney having the direct discussions with the then Chancellor Osborne then our budget will have been cut by a further £7 billion and the post-Brexit referendum days have been suggested by some Tories that the Royal Yt Britannia should be recommissioned to encourage trade and not to forget the taxpayer divvying up the tab to refurbish Buckingham Palace and also the abhorrent replacement of Trident nuclear weapons. The waters of anxiety are rising throughout Europe and the Tories' responses were going to need a bigger boat to carry the record £1.79 trillion of national debt and also the rising level of destitution. The approach towards how we grow our economy could not be more different between our two Governments. A hard Tory Brexit will cut trade, cost jobs and lower living standards yet week after week in the Scottish Parliament the Tories vote against continuing membership of the European single market. The Scottish Government on the other hand set out its strong ambitions and a programme for government around the NHS early years, closing the attainment gap and the Tories want to roll back the gains of devolution that they have helped so many families. The one nation mantra this one nation mantra of the Tories lives on. If the Tories they might not still have their comments are on they have disagreed with that element but just to remind them of a comment that was actually made by their Prime Minister this was in June of this year and this was in their pitch to become leader of our party. This programme of proud philosophical tradition of one nation will include big change to the way we think about our economy of society and our democracy. A stark contrast to the unaction of the UK Government this SNP Government has taken action in the wake of Brexit to support the economy by bringing forward an industrial £100 million in capital but also Scottish Government's proposed reforms to council tax will generate £500 million over the lifetime of the Parliament and in the run-up to the Scottish election may the Tories plan for council tax reform with reduced tax revenues affecting the ability of councils to deliver vital public services. My final point is this staggering hypocrisy from the Tories today is certainly the heart of the arguments that the Ruth Davidson party are making and they continually seek to criticise the Scottish Government for turning a blind eye to what their party colleagues are doing south of the border for failing to get their own house in order. I call Ross Thompson to be followed by Richard Lyle. Ross Thompson is the penultimate speaker in the open debate. When I heard this morning that the cabinet secretary Derek Mackay had left his change at the parliamentary coffee counter when purchasing his morning pick-me-up I wondered maybe this is how he approaches his responsibility to the public finances. Perhaps he starts off his day entering his ministerial office and realises that he has lost £14 million in cap payments through a hole in his pocket or he goes through his day leaves St Andrew's house, heads home, he gets back, sits down, puts on a telly, maybe it's the X Factor and suddenly realises that he has lost £290 million in the land and buildings transaction taxes but don't worry, the cabinet secretary thinks to himself with these fantastic new powers in Parliament I can always just stick up taxes on hard-working Scots or north-east businesses I almost find it amusing that Mr Mackay appears to have little respect for sound finances it was even slightly humorous that the cabinet secretary and committee did not seem to understand the fundamental economic concepts such as the Laffer curve a key economic principle shown that as tax rates go up revenue goes down but now that we can see the SNP's tax proposals I can assure you that no one is laughing now it is becoming increasingly more apparent that the SNP Government intend to ignore the vast majority of expert economic advice including that of their own growth commission by going ahead with an increase to the top rate of income tax this will force higher rate taxpayers to pay up to £800 more per year by 2020 the cabinet secretary's budget will make Scotland the highest tax part of the UK this is fundamentally unfair on hard-working skilled workers in Scotland in the north-east we have huge issues finding skilled workers to fill our teacher vacancies plug shortages in the NHS attract the skills and expertise from across the world to continue the renaissance in our oil and gas industry the SNP's plans to hit skilled workers makes life harder for our local authorities our wider public services and our businesses when it comes to the north-east of Scotland whether it's business taxes council taxes or income taxes the SNP is all about take, take, take and always giving very little in return no thank you I won't this year alone north-east businesses have been hit hard by over 7 million in a council tax grab from the SNP despite this the north-east will still contribute 18.3 million net by 2021 to rub salt into the wounds the millions raised through this major tax grab from the north-east will be spent almost exclusively in the central build there will be very little benefit for thousands of households in the north-east who will have whacked up higher tax bills it is absolutely outrageous the SNP tax proposals will not kickstart Scotland's sluggish economy nor will they would Mr Thompson care to do what no other Conservative member has been able to do far and tell us in the budget tomorrow and what their proposals could be what public expenditure they would cut to pay for tax cuts in Scotland Mr Thompson I'm sure that Murdo Fraser tomorrow will be able to tell Mr Mackay exactly what a prudent financially prudent budget is all about a budget that will create growth a budget that will create jobs and a budget that will be good for Scotland so here Mr Fraser tomorrow will attract more higher earners or top rate taxpayers to Scotland increasing the top rate of income tax will only serve as a disincentive for the best and the brightest to come to Scotland higher taxes will diminish our overall tax base and put additional strain on our public services higher taxes will cause a drain on talent to other parts of the UK and higher taxes will siphon creative talent from our own vital industries a report from Arthur the Countancy firm Johnson Carmichael to the Finance Committee found that Scottish companies will have to offer tax equalisation packages to attract and retain the talent that they need to thrive it's clear that if the SNP's tax regime penalises businesses and skilled labour companies will simply relocate to other parts of the UK it is so important that Scotland is financially attractive for skilled workers and potential investors the SNP's tax policy will attract neither Deputy Presiding Officer it is clear that on the issue of taxation as on all issues affecting Scotland today the SNP government have shown themselves time and time again to be politically out of touch and economically out of their depth by increasing taxes the SNP will effectively erect a sign at the Scottish border saying closed for business it would be the worst possible thing for this country for our people, for our businesses and would send out exactly the wrong message to the rest of the UK and the world that Scotland taxes skill, hard work and innovation I therefore urge members to support the amendment in the name of Murdo Fraser today Thank you very much Mr Thomson I call Richard Lyle the last speaker in the open debate then we move to closing speeches Mr Lyle I want to begin my remarks by reflecting on the motion that the Parliament believes that the Scottish families and businesses should not be taxed more highly than elsewhere in the United Kingdom For me, as with any debate in this chamber, the focus should be on those not in this place but outwith that is the people of Scotland or as any only accurate part of today's motion reflects upon Scottish families and businesses the people of Scotland that I want to reflect my remarks upon because I really won't be lost on anyone in these benches as to hearing from the Tories how they wish to stand up for Scottish families and businesses these are the same Tories who, unlike the SNP Scottish Government rather than protect public services they look to cut them all done through their colleague and friend, the Chancellor of the United Government UK Government We watch a Tory Government Scotland never voted for and pose a decade of real-terms reduction on Scottish budgets That is simply the fact UK Tory Government cuts do not deliver for Scottish families and Scottish businesses Of course it's important to linger on that point that I made just a moment longer a Tory Government Scotland never voted for because that is ultimately what today's motion will serve to address, Presiding Officer In May just a few months ago people of Scotland returned this SNP Government for an historic third term in office We in these benches believe in developing tax policy which delivers for the people of Scotland for a sustainable economy and unlike the Conservatives we have a mandate which we will discharge as we continue to deliver for Scottish families and Scottish businesses It's a bit rich though to hear from those on the Conservative side of the chamber today Since 2010 the only income tax rate that the Conservatives have cut is the additional rate from 50p to 45p which I think is a clear insight into their priorities, Presiding Officer Indeed, the Resolution Foundation estimates that the policies announced in the 2015 election and the election of a Conservative Government mean that the poorest 10% 10% of households will lose out on an average of around £400 a year while those in the richest 10% of households will gain around £200 a year by 2021 If there's one thing that's certain it's that the SNP doesn't need to take any lessons from the Tories and Taxes The Tory tax and benefit changes that are hurting the most vulnerable more than the rich That is the Scottish family and business, Presiding Officer On the other side of the coin the Scottish Government are taking positive actions to deliver for Scotland's people Our income tax proposals for 2017-18 and beyond will protect lower income taxpayers but they will also generate extra revenue of around £1.2 billion by 2021-22 To invest in key public services we are protecting low income taxpayers by committing to not increasing the basic rate of income tax and by ensuring that personal allowance will reach £12,750 by 2021-22 In terms of numbers that means that 99% of adults will pay no more tax given their current level of income than in 2016-17 Our plans have served to protect the low and middle income taxpayers but generate extra revenue to every year to the rest of the parliamentary term which we will invest in key public services by asking higher rate taxpayers to forgo a tax cut It is important to recognise that tax is only the one side of the balance sheet and those on higher incomes are being asked to pay a little bit more and those people are benefiting from free higher education free personal care free prescriptions and other vital public services in Scotland I believe that the people of Scotland will agree that those who are in the position are being able to afford to pay a little bit more to help to build the type of society that we want to see and protect our vital public services will be happy with this Government's plans With the time that I have remaining in this debate I want to reflect on business in Scotland and the record of this Government in delivering for business This Government introduced a small business bonus recognising the extreme importance of small businesses the core component of creating a type of sustainable and growing economy that Scotland wants We continue to want to see that scheme evolve That is why this Government has committed I am sure to expand the scheme from 2017 to lift 100,000 properties out of rates altogether The small business bonus is estimated to benefit 102,394 two in every five properties in 2016-17 with the scheme remaining rates altogether with around 80,000 properties and whilst we are listening to the Tories today it is important to note that our scheme is significantly more generous than the current equivalent relief in England To conclude we are action to support business for rates relief proposals and APD priorities that are even more pressing as a result of the EU referendum and of course our small business bonus We are committed to a fair system of taxation and it is clear on these benches that this SNP Government will have a vision for Scotland and a real commitment to predicting Scottish families and indeed Scottish business Thank you Thank you very much Mr Lyle Before I move to closing speeches I was not present to take part in the debate John Mason and Ivan McKee understand that Dean Lockhart is actually closing for the Conservatives as he is not in the chamber I expect there to be some reasons given it is a discurty to say to members not to be present as well as to the chair and I'll call on Willie Rennie please to close the Liberal Democrat six minutes please One of the benefits of the new ruling by the Presiding Officer that we are allowed to tweet in this chamber is that you're able to read some of the tweets that others are making about you and Christina Kelvie who's actually not here this afternoon was recommending some duet between Murdo Fraser and myself following my opening speech but Carpenters close to you she mustn't have actually listened to the speech that I was making because I was clearly setting out the differences between myself and Murdo Fraser but my desire for Murdo Fraser to stand up for his own confidence and his own abilities and actually endorse the powers of this Parliament rather than just simply handing him over to the chancellor in Westminster Liam Kerr I thought made a very interesting initial contribution he criticised the SNP ironically on this particular occasion for being ideological for being ideologically driven quite ironic in the circumstances that Dean Lockhart then later on set out that the conservative motion today wasn't just about matching Westminster but was about even going further about cutting taxes below what we are proposing to do in the Scottish Parliament so ideological driven seems to be the nature of the day for the Conservative Party rather than being able to make that claim about anyone else at all so I think they should perhaps be a little bit more careful before they band around these insults to other parties John Mason I thought made a useful contribution I don't often agree I know it's difficult to believe but he did but he made this contribution about balancing about the balancing up the needs of tax and spend he put greater emphasis on the spending side and that being the first priority but also balanced that up by saying that we needed to be mindful of the impact on behavioural change, on tax and on other effects too I do think it is a balance it isn't just about cutting tax it isn't just about increasing spending on public services we need to judge the mood at the right time and the need for public services and the need and the load that the taxpayer can take as well and that's the approach that we have taken I thought Murdo Fraser very cruelly criticised me early on despite the fact that I was praising him by saying that we were previously using tax cuts back in Tavish Scots reign that was true it was the judgement at the time that we were making happy days when Tavish was in charge we made the judgement at the time that that was the right judgement to make at that time we've subsequently also made a judgement at this time that we should be increasing taxes modestly to invest in education because the need is so great because Scottish education has gone from one of the best countries performing countries in the world to just average the investment is required now now that we have got these powers in our hand we should seize the moment and make that decision and when we were in power together at Westminster we cut taxes for those on low and middle incomes so we are not ideological about this we make the judgement at the time that fits the economy not just now so making sure that we make that judgement right is the underlying principle to not cutting taxes no matter what the consequences making the judgement that is right for the country Adam Tomkins who has just been heckling me from a sedentary position but not particularly effectively not just now not just now I'm about to make a point he had the cheek to lecture everybody else about businesses moving abroad and this is from a party a party a party that has advocated now delivering a hard Brexit to this country that is going to drive more businesses out of this country than any other single act that anybody can take nothing nothing in comparison with the fears that he has on income tax okay then go on persistence is paid off would it be fair to say thank you for taking intervention Mr Rennie but you've outlined a variety of positions that you have favoured historically and currently which would be your favoured position Mr Rennie my favoured position for now which is exactly the point thank you for this opportunity thank you for that we are in favour we are in favour Mr Scott if you've not been paying attention of a modest penny on income tax for a transformational investment in education so we can drive Scottish education back up to being the best in the world again if you don't support Scottish education being one of the best in the world again that's up to you but that's the decision that we should make just now to invest in Scottish education using the tax powers that we have I actually thought Kate Forbes' contribution was excellent too because she picked up on that exact point this is about looking at both sides of the balance sheet looking at what we tax and what we spend and making the right balanced choice for the future of the country now I suspect tomorrow we may disagree with some parts on the budget but what we will overwhelmingly agree on that we should not be making tax cuts no matter what the consequences no matter what the impact is on public services that is the road to ruin thank you very much I now call Andy Wightman to close the green party Mr Wightman please thank you thank you to Murdo Fraser for bringing this a very interesting debate and the Conservatives I see are in full swing there including Mr Ross on the top right good to see him in his seat as well I too like Mr Fraser but I don't like his motion I think it's misplaced one might equally ask why does Scotland not pay more tax than Canada or Estonia or Japan or indeed Mali or indeed a local level in Mr Fraser's own constituency in Perth I recall in the tax commission in fact I relayed this tale in a previous contribution to the chamber but I didn't name the politician concerned was in fact a conservative councillor who told me that what she wanted to do in the next local election was to go to the electorate with an offer about what the Conservatives or her council area what she would do how they would pay for it and how they would raise the money and that is basically what most politicians want to do at all elections at a local and a national level and that means having discretion and freedom over things like tax et cetera it is a choice if people in Perth in Mr Fraser's constituency would like to pay a little bit more tax to pay for a new swimming pool that should be their choice it's not a hard and fast rule to never pay more than its neighbour Countries where taxes are in fact higher as a share of gross domestic product research has shown are actually wealthier they are better off they are more productive they have higher levels of investment and they have lower levels of inequality Alison Harris in the debate mentioned Nicola Sturgeon visiting Ireland the last major politician before Nicola Sturgeon to visit Ireland I think might have been the previous chancellor George Osborne who when he visited Dublin in 2006 said that Ireland stands as a shining example of the art of the possible in long term economic policymaking and look how that turned out Liam Kerr indeed made an interesting contribution quoting Einstein saying that the hardest thing to understand in the world is the income tax I think if Einstein had listened to his speech the most difficult thing to understand was in fact his argument as Einstein also said the difference between stupidity and genius is that genius has its limits now with new powers in this Parliament I think we have the opportunity to think differently this debate is not simply a debate about tax rates it's about how we design the taxation system tax design is vitally important and there's a lot of history on this there's a wheelhouse who talked about Adam Smith's four maxims of taxation and the fourth principle being that people should pay tax in proportion to their ability to pay to pay and as the finance secretary indicated in response to Richard Leonard this is often thought of in relation to income tax that you should pay in proportion to your income the problem with this of course is that Adam Smith wrote The Wealth of Nations in 1776 that the income tax was not introduced to the UK until 1799 by Pitt the Younger who needed revenues for the Napoleonic Wars Smith was not referring to income he went on to make clear that proportionate meant that my quote is proportionate to the revenue which they respectively enjoy under the protection of the state in other words what Adam Smith was talking about was rents he was talking about land rents and yet today land rents in relation to for example domestic property in the form of the council tax are the most aggressive tax in the UK where the poorest 10% of the lowest income families paid between 6 and 8% of their income in council tax and the top 10% pay a mere 2 to 3% as the green amendment suggests we want to see a shift a tax shift from incomes to wealth and a very good example where the Tories are quite hypocritical on all of this is that in Dunfermline I know Willie Rennie is not paying attention but where Amazon have their distribution warehouse and they have another dozen or so across the United Kingdom the non-domestic rate rateable value of that premises is £3,776,000 that generates about £1.8 million a year in rates to five council and across the UK it generates more than the entire corporation tax paid by Amazon and yet the Tories are worried to cut corporation tax and this demonstrates the importance of having a shift from incomes and profits to wealth and land more recently we had the mirrorleys review in 2011 talking about tax redesign and I commend members read it it's a very good document it talked for example about scrapping transaction tax, I mean green support and indeed scrapping council tax more recently we had Naomi Eisenstadt recommending that we scrap council tax and we focus on the tax paid by the lowest 40% of earners more recently we've stressed the importance of raising tax at the top rate and we share Labour's aspiration to do that we may differ on the rate itself but we did this because we felt that it wasn't so much about raising revenue as about tackling inequality because curbing excessive pay demands is a vital ingredient in curbing inequality and reducing inequality and our green proposals that we put to the electorate and I commend them to members to read we actually quoted the impact that would have on the Gini coefficient and finally I just want to stress that tax is not just about income the inland revenue published statistics or rather statistics looking at the total taxes paid direct and indirect and it shows that in 2015 the bottom 20% of earners paid 40.7% of their total income and tax the top 20% paid just 37.8% because direct taxes or rather indirect taxes are extremely regressive you must stop there Mr White when you're cutting into other people's time James Kelly now to close for Labour please six minutes thank you deputy it gives me a pleasure to rise and speak in favour of the Labour amendment I do thank the conservators for bringing this debate forward because it has allowed us to have a substantive debate on the budget priorities ahead of Mr Mackay's announcement tomorrow something as Patrick Harvie pointed out we've been denied because of the curtailed nature of the budget scrutiny there's been three themes that have run through this debate the impact of the current cuts and impending cuts in the Scottish budget the taxation options that are open to us and also how we generate economic growth I think in terms of the cuts we've seen the very dire warnings from the Fraser Valander Institute of the potential for £700 million of cuts between now and the end of the Parliament a unison of warden that in the course of this year they reckon there's been 7,000 job losses in local councils with cumulative cuts of £184 million but it's not just about the numbers as Kezia Dugdale pointed out it's about the impact that that would have on people's lives as people look at Mr Mackay's statement tomorrow if you're in a community where a library is under threat of closure or if you're in a school where potentially the number of classroom assistants might be cut or if you're staying in a house which needs repair then you'll be really worried about the budget settlement that Mr Mackay's going to announce and whether there's the potential for further impending cuts in local authorities but you wouldn't have heard anything about these practical examples from the Tory benches speech after speech if you produced a word cloud on it the words that would come out were wealth and money that's what it was all about for the Tories you didn't hear anything about inequalities you didn't hear anything about how in the economy currently that women are suffering more than men and that there's a decline in job numbers for women you didn't hear anything about the issues that many of us hear in our constituencies and regions I'll give way to Mr Mason John Mason Is he suggesting that we could cover all the Tory tax cuts since 2010 with tax increases this year? James Kelly I certainly would suggest that the benches there could go a way forward but tonight supporting the Labour amendment to increase the top rate of 50p that would not only give a strong signal that you support progressive taxation but it would give some assistance to the people who are suffering in communities throughout Scotland no, not at this time all, Wilhau spoke about protecting public services and you look at the impact of the SNP record in education an 8% cut in funding per pupil 3,500 less teachers than we had in 2007 and look at the outcome that gives you from yesterday's stats nearly a quarter of young kids leaving primary schools who are unable to read, write or count to the required standard that's an absolute scandal and it's a consequence of the cumulative cuts of this SNP Government Mr Doris I thank Mr Kelly for giving me I'm just wondering in terms of educational funding in South Lanarkshire council the area where Mr Kelly is based whether he would comment why South Lanarkshire Labour control council says it will be good enough to freeze council tax next year James Kelly The best thing that MSPs like you and your colleagues could do in terms of supporting South Lanarkshire council is supporting a funding settlement to deal with the cumulative effect of millions of pounds of cuts that South Lanarkshire have had to deal with No thank you Mr Doris No thank you you've had your say On the issue of taxation Labour support a top rate of 50p to protect public services and to expand the tax base Jackie Baillie ridiculed the Tories for their support of APD The fact of the matter is that a third of Scottish families can't even afford to get a holiday and yet the SNP the Tories want to abolish APD and the SNP want to cut it Some of these families can't get a trip to the seaside and the Tories supported by the SNP are more interested in supporting families on their way to the duty free shops The final point I would make is that in terms of growth Murdo Fraser argued against higher taxation in terms of the impact that it would have on growth but we know that if you stay in poor housing your chances of educational advancement are undermined surely if we invest in public services and we have better quality houses and we give people the chance to advance in education and then address the skills gaps issues and promote the promote the economy That's got to be one of the advantages of progressive taxation support the Labour amendment at 5 o'clock Thank you very much You can remind members not to use the term you in the chamber because the OR doesn't know who you're speaking about Can I then move on and call Derek Mackay to close for the Government Cabinet Secretary Seven minutes please Thank you very much I found this very helpful debate in advance of the budget that I will set out tomorrow I think that it's been a helpful debate in terms of tax policy it's our position that tax policy should be developed in a responsible manner Mr Wheelhouse, Minister for Business, Innovation and Energy covered the key principles around certainty, convenience efficiency and proportionate to the ability to pay but it's also the case that this Government has taken a collaborative approach to tax policy and we've also outlined a tough approach to tackling tax avoidance but it's our position that we aspire to protect low and middle income tax pairs and given the choice between raising revenues or handing out large tax cuts to the richest in Scotland we choose public services Taxes are part of the social contract and it's through raising revenue that we can provide equality NHS free education delivery of the living wage free prescriptions and free personal care choices that are right for Scotland but choices that are now under threat by the Conservatives Would the Conservatives like to offer which of those policy choices you believe should be abandoned for the people of Scotland? I'm very grateful to the cabinet secretary for giving way given he has time to do some reading does he now understand the Laffer Curve I've just asked a very serious question about the public services that are provided to the people of Scotland and I get a childish remark from the finance spokesperson of the Conservative Party but I have a more informed remark from Murdo Fraser which says exactly which of those commitments I've just outlined that the Tories want to abandon and describe the policy commitments that I've just outlined like concessionary travel, the council tax fees, free prescriptions and free tuition and they went on to say of those spending choices these are choices the Scottish Government is making and they are increasingly looking like the wrong choices it looks from the shock on your colleagues face you don't know that you have abandoned some of those policy choices you say I have to agree with other members of the opposition that this debate left tax and focused on something even bigger in terms of ideology and that was devolution itself you see the Tories have shown their true colours today that's what we have learned from today's debate not the tax position but their position on devolution in Scotland they have reverted to type do as Westminster does the only tax rate that has changed under the Conservatives was to reduce the top rate of tax for the richest in the United Kingdom a totally wrong decision when it comes to funding our public services and when I look at what the Conservatives have done around thresholds on inheritance tax as well it's clear in this country that the UK Conservatives care more for the dead rich than the living poor it's a travesty for those no I'm afraid I want to finish this the Tories centralising tendencies to Westminster we have said oh I think I've hit a raw nerve I've hit a raw nerve yes the Tories day job we know what it is it's to do as your London bosses tell you to do but if it was the position of the Conservatives simply to undercut taxes in Scotland the duty is to you to tell us what spending commitments tomorrow you will propose to undo the Conservatives have totally failed you make spending commitment after spending commitment and it's not feasible to simply reduce taxes whilst demanding more public expenditure you see we're investing more in schools and hospital whilst the Tories focus on refurbishing policies and nuclear weapons devolution was about the ability to do things differently and we want to chart a different course one that is fairer and more progressive whilst the Tories propose tax cuts for the richest and big business and the Scottish Tories are no different not even not even on the single market we've had Brexit deniers but now in the Tories we've got Brexit gymnasts with the summer salts on the position around the single market you see people want to live work and invest in Scotland despite the Tories talking Scotland down let me give you some of the positives about Scotland's economy Scotland's GDP per head is now 2.1 per cent above its pre-recession peak compared to the UK which is only 1.2 per cent above its pre-recession level even excluding North Sea oil and gas Scotland's output per head is higher than UK average excluding London productivity in Scotland output per hour has grown 4.4 per cent since 2007 compared to no growth in the UK and since 1999 the period of devolution real full time weekly pay in Scotland has driven 17 per cent compared to 12 per cent in the UK and investment in research and development is up in Scotland as well that's a strong economic message but we should use our powers for a purpose and that's not just to pull every economic labour just to see what happens it will be a balanced approach a progressive approach one based on fairness that is pro-enterprise pro-entrepreneur pro-growth but also tackles inequality we can chart a different course the Tories have done a different course the Tories have reverted to type London controlled, tax cuts for the rich abandoned universal services and talk Scotland down if divergence on tax is coming it's coming because we want a different way in Scotland and I will be proud to propose that budget tomorrow thank you cabinet secretary now call on Dean Lockhart to close with the Conservatives till 4.59 please thank you we called for this debate on taxation because tomorrow's budget will set the future direction of tax and fiscal policy in Scotland and let me remind members who call us devolution deniers that these powers were delivered to this Parliament by a Conservative Government under these new tax and fiscal powers coming to this Parliament levels of public spending in Scotland will for the first time depend on large part on the performance of Scotland's economy to the rest of the UK this new fiscal landscape has far reaching implications for policy there is cross-party consensus that we need to increase levels of public spending and improve public services in vital areas to do this the policy taken by the SNP and other parties is to increase tax they have each made it very clear today they want Scotland to be the highest tax part of the UK we take a different approach we think that families and business in Scotland are higher than elsewhere in the UK our policy approach is to increase levels of public spending and improve public services by expanding the economy and expanding the tax base in Scotland let me make it simple a faster expanding economy will allow the Government to spend more during the debate my colleagues have made two things very clear first of all stronger economic growth should be an absolute priority for this Government any steps to increase Scotland would damage future growth and secondly higher levels of tax would shrink the tax base in Scotland for those not convinced by the principles of the Laffer Curve as clearly explained by my colleague Marta Fraser I would draw your attention to what President John F. Kennedy called the paradoxical truth when he said that the soundest way to raise revenues in the long run is to cut tax great now we agree with that let me first address the fundamental priority of economic growth the Fraser of Allander report published just yesterday highlighted the need for Scotland to close the growth gap with the rest of the UK in order to avoid further reductions in public spending this report reflects the concerns that we have raised many times in this chamber about the underperformance of the Scottish economy this underperformance as highlighted by Jackie Baillie will now have a real impact on the public spending in Scotland if we look at the Scottish Government's principal economic targets the 4Is and compare relative performance with the rest of the UK we can see that inclusive growth is down innovation and productivity is down internationalisation and exports down investment Scotland's share of inward investment and jobs are down so let me make it clear to Mr Mackay this economic underperformance was happening long before Brexit in fact in 8 of the 10 years the SNP has been in government the Scottish economy has underperformed the rest of the UK and this is set to continue growth in Scotland for 2017 is forecast to be less than half of the UK growth the Fraser of Allander report also highlighted a number of structural problems facing the economy in Scotland low growth, low productivity declining exports only 50 companies in Scotland accounting for 50 per cent of our exports lowest employment growth rates in the UK and the highest rates of economic inactivity given this economic background making Scotland the highest tax part of the UK is precisely the wrong policy response yes please go ahead Patrick Harvie I'm grateful to the member for giving way he returns to this central argument that we've heard from many conservative speakers during the debate that higher taxes in Scotland are just wrong in principle look even if I believed everything else that the Conservative Party have been advocating how if it's wrong to take more income tax from wealthy people how can it possibly be right for the UK government to be taking more income away from poorer people the two things simply cannot add up Dean Lockhart they are independent points what we are saying is that if people are too high they will leave the country that's what the Royal Society of Edinburgh has said they have said there is real danger that if tax in Scotland at the higher rate is set at a rate too high we will lose more tax than we gain that's what they said so if we are to increase government tax revenues and spending in Scotland we need to expand our business base attract entrepreneurial individuals increase our exports help our existing businesses expand and attract business from the rest of the UK making Scotland the highest tax part of the UK is not the answer we also need to use tax policy to expand the tax base in Scotland encourage increase participation in the economy and stimulate business activity Mr Swinney has joined us as finance minister Mr Swinney recognised the need to use tax policy to stimulate business when he acknowledged in 2012 that business rates do play a part in attracting and retaining businesses and when he committed to setting the poundage rate no higher than that set in England things unfortunately have changed for example the large business supplement now makes the poundage rate in Scotland double that in England in addition under this SNP government business rates have gone up LBTT is up effective tax on empty business properties is up effective rate on income tax for higher earners is going up sporting rates are up council tax is up and is being taken away from the local authorities Presiding Officer it's not just SNP who want to make Scotland the highest tax part of the UK as we've heard today all the other parties in this chamber want to increase the tax burden in Scotland for high income individuals however well intended these policies of higher taxation might be evidence to show they're ultimately doomed in their objective to increase the levels of government income available for public spending I mentioned the Royal Society of Edinburgh they have given advice that in setting tax policy there should be a high level of caution exercised by the Scottish Government not to shrink its tax base yes Willie Rennie, sorry several times several times that he wants to cut tax can he explain why the chancellor has increased national insurance contributions for those on £45,000 by up to £200 why has he done that if he's so much in favour of cutting tax Dean Lockhart I think Mr Rennie you have to look at the totality of the fiscal policy of the Government and the direction of travel is to reduce taxes overall let me refer members to Mr Kai once he meets with the head of the S&P growth commission Andrew Wilson perhaps we'll want to discuss his approach to how to increase revenue from taxpayers in Scotland his policy is that it is better to expand the tax base of Scotland rather than increase tax rates again something we agree with let me conclude let me conclude by considering the position of individuals and businesses looking to set up a higher taxed Scotland those individuals and businesses will need to factor into account the following additional costs higher tax on their business through the large business supplement higher tax on empty properties when looking for skilled employees they will have to pay a supplement to top up their wages so they get the same take home pay as the rest of the UK the business owners and the employees will have to pay higher rates of tax in their residential purchase higher amounts on commercial premises with a rateable value above £35,000 given all of this it is no surprise that the economy in Scotland is lagging behind the rest of the UK with tomorrow's budget Mr Mackay has the opportunity to make amends to reverse the direction of travel of S&P policy make Scotland more competitive and make sure that families and business in Scotland are not taxed more than elsewhere in the UK Mr Mackay asked for some ideas for his budget tomorrow can I suggest a start Mr Mackay perhaps your Government can stop wasting close to £1 billion in cost overruns and the incompetent management of projects Cabinet Secretary I think Dean Lockhart has just made a pretty feeble attempt to explain how they would cut taxes are you not aware that spending commitments for the past can't pay for tax cuts in the future don't even understand basic arithmetic Mr Lockhart Mr Mackay very often refers to the manifesto upon which the S&P was elected in May that manifesto contains two things a commitment to independence and a bunch of spending commitments that is based on the Barnett formula so which is it Mr Mackay is it independence or the spending commitments that are underwritten by the Barnett formula I move the motion in Murdo Fraser's name thank you very much that a point of order from Ross Thompson Presiding Officer can you advise on a point of order and whether the Cabinet Secretary for Economy Jobs and Fair Work should correct the record in a parliamentary question I asked him if the building of the Aberdeen western peripheral route was delayed on the 22nd of September he answered that there was no delay at the public audit committee on 4 November I asked a question of Transport Scotland and was again told there was no delay yesterday it was revealed that Transport Scotland became aware of delays to the project on the 9th of November two weeks before they directly told me otherwise will the Presiding Officer agree that the Cabinet Secretary responsible for Transport Scotland should make a statement or appear before committee to clarify when Transport Scotland knew of the delay when he knew of the delay at the public audit committee and why a committee of this Parliament was not given the facts Thank you Mr Thompson for the advance notice of his point of order I understand that Mr Thompson wishes to pursue this matter further I would also note however from his comments that these were matters raised at a committee meeting of the Parliament and in reply to a committee of the Parliament rather than for the chamber so I would suggest it's not a point of order for me and the chair but I would suggest that he raises it with the chair of Ireland committee and for them to raise it in turn with the cabinet secretary Can we move on to the next item of business which is consideration of a business motion 3104 in the name of Joe Fitzpatrick on behalf of the Parliamentary Bureau setting out a business programme I would ask any member who wishes to speak against the motion to press their request to speak button now I call on Joe Fitzpatrick to move motion number 3104 Formally moved No member has asked to speak against the motion the chamber, the question is that we agree motion 3104 are we all agreed we are agreed the next item of business is consideration of two parliamentary bureau motions I would ask Joe Fitzpatrick to move on block motion 2956 on approval of an SSI and motion 3105 on designation of lead committee move on block I will move to decision time and there are seven questions today I would remind members that if the amendment in the name of Derek Mackay is agreed then the amendment in the name of Patrick Harvie and Willie Rennie will fall first question is that amendment 3063.3 in the name of Derek Mackay which seeks to amend the motion 3063 in the name of Murdo Fraser on taxation be agreed we are not agreed we will move to a vote and members may cast a vote now the result of the vote on amendment number 3063.3 in the name of Derek Mackay is yes 60 no 61 there were no abstentions the amendment is therefore not agreed the next amendment I would inform the chamber that if the amendment in the name of Kezia Dugdale is agreed then the amendments in the name of Patrick Harvie and Willie Rennie will also fall will fall so the question is that amendment 3063.1 in the name of Kezia Dugdale which seeks to amend the motion in the name of Murdo Fraser be agreed are we all agreed we are not agreed we will move to a vote and members may cast a vote now the result of the vote on the amendment in the name of Kezia Dugdale is yes 29 no 91 there were no abstentions the amendment is therefore not agreed the next question is that amendment 3063.4 in the name of Patrick Harvie which seeks to amend motion 3063 in the name of Murdo Fraser on taxation be agreed are we all agreed we are not agreed we will move to a vote and members may cast a vote now the result of the vote on the amendment in the name of Willie Rennie is yes 27 no 88 there were six abstentions the amendment is therefore not agreed the next question is that amendment 3063.2 in the name of Willie Rennie which seeks to amend the motion in the name of Murdo Fraser be agreed are we agreed we are not agreed and we will move to a vote and members may cast a vote now the result of the vote on the amendment in the name of Willie Rennie is yes 27 no 88 there were no abstentions the motion is therefore not agreed and the next question is that motion 3063 in the name of Murdo Fraser on taxation be agreed are we all agreed we are not agreed we will move to a vote and members may cast a vote now and the result of the vote on motion 3063 in the name of Murdo Fraser on taxation is yes 29 no 92 there were no abstentions the motion is therefore not agreed the next question is that motion 2956 on approval of an SSI be agreed are we all agreed and the final question this time is that motion 3105 in the name of Joe Fitzpatrick on designation of lead committee be agreed are we all agreed we are that concludes decision time we will move to members business in the name of Marie Todd so if members could change their places