 It concludes the debate on regulation of legal services Scotland Bill at stage one. It is now time to move on to the next item of business, which is consideration of motion 11800 in the name of Shona Robison on a financial resolution for the regulation of legal services Scotland Bill. I call on Siobhan Brown to move the motion. I move the motion, Presiding Officer. The question on this motion will be put at decision time. The next item of business is a debate on motion 1-2-2-5-2, in the name of Shona Robison, on Scottish Income Tax Rate Resolution 2024-25. I just allow a moment for front benches to organise themselves. Can I invite members who wish to speak in the debate to press their request to speak buttons? I call on Shona Robison to move the motion. I call on Tom Arthur to speak to the motion up to seven minutes, minister. Thank you, Presiding Officer. I would like to draw the Parliament's attention to the procedural connection between this debate and rule 9.16.7 of the standing orders that states that a Scottish rates resolution must be agreed before stage three of the budget bill is able to proceed. This rates resolution debate is set against a backdrop of one of the most challenging periods for the public finances in the devolution era. Our economy has been damaged by Brexit. We have faced a period of continued high inflation, and we have a Tory UK Government that is failing to deliver the investment that is needed in public services. Just last week, it was confirmed that the UK has entered a technical recession. UK Government spending decisions have resulted in a real-terms cut of 1.2 per cent in our block grant funding since 2022-23. That backdrop presents huge challenges for the Government here in Scotland, which is committed to progressing our free core missions of equality, opportunity and community. Therefore, in the 2024-25 budget, we have taken the difficult but necessary decisions to allow us to sustain investment in our vital public services upon which so many people rely. Our principles as a Government, commitment to progressive taxation and investing in the people of Scotland have guided our income tax policy decisions at the budget. For 2024-25, we propose that no changes are made to the starter, basic, intermediate and higher rates of 1920, 21 and 42 per cent. We also propose that the starter and basic rate bands are increased by inflation. We propose that the higher rate and top rate thresholds are maintained at their current levels of £43,662 and £125,140 respectively. Finally, we propose the introduction of a new advanced rate band of £45, which will be applied on income between £75,001 to £125,140 and an increase in the top rate by £1 to £48. That proposed policy package will see more than half of taxpayers in Scotland continue to pay less than they would in the rest of the UK. The Scottish Fiscal Commission estimates that the advanced rate will impact only the highest-earning 5 per cent of taxpayers in 2024-25. In fact, when recent changes to national insurance are accounted for, only employees who earn in excess of £100,000 will pay more tax in the coming financial year than they did in this year. I am very grateful for the minister's giving way. Could the Scottish Government tell the chamber what analysis it has done of the comments that have been made by the business community, most especially people like Sandy Begby, who put on record last weekend that Scotland is becoming, I quote, a dangerous place in which to create wealth? What I would note is that in 2023 earnings grew by 8 per cent faster than in any other part of the UK. Of course, vital for the success of business and our overall economy are strong public services. Had we not taken those decisions to have a progressive tax policy in Scotland, we would find ourselves having to replicate the real-terms cuts to public services that are being inflicted in England. I am afraid that I have got to make some more progress. I will try to take an intervention shortly. That is a targeted tax package that will raise vital revenue to invest in public services, while projecting the majority of taxpayers. The Scottish Fiscal Commission has forecast that the introduction of the advance rate and increase to the top rate will raise an additional £82 million in revenue next year. In addition, we estimate that maintaining the higher rate threshold at its 2023-24 level will raise a further £307 million. I am afraid that I have to make progress, given the limited time that I have available. We also estimate that our decisions on income tax since devolution could raise £1.5 billion more in 2024-25 compared to if we matched UK Government policy. Our progressive approach means that we can continue to support the most generous social contract in any part of the UK. That includes our flagship Scottish child payment, free prescriptions and free higher education, all of which represent an investment in the people of Scotland. I understand that many members of this Parliament have questions about how those policies could affect taxpayer behaviour and the economy. As always, we have relied on independent forecasts by the Fiscal Commission that show our policy raise revenues. However, I agree that, given the influence of tax policy on the economy, it is essential for us to continue to monitor closely and further build our evidence on what we are doing. However, critics of our approach also need to remember that slashing taxic taxes and running down our vital public services would not make Scotland a better place in which to live, to work and to do business. Despite all the uncertainty that we face, our economy has been resilient. As I said, earnings in Scotland grew by 8 per cent in 2023, faster than any other part of the United Kingdom, including London and the South East, providing a further boost to our tax revenues. There is, of course, one great uncertainty that hangs over our plans. That is the UK Government's spring budget. That will have a material impact on Scotland's budget, yet we are not sighted on any of those plans whatsoever. Bluntly, we are left to guest based on speculation in newspapers. If the various media trails are to be believed, that will see further cuts to spending on vital public services and further cuts to tax. It goes without saying that this approach would be unsustainable. Just last month, the IMF warned the UK Government against further tax cuts, stressing the need to boost key areas of public spending instead. Having no clarity over the Chancellor's intentions puts us in a difficult situation. While we can continue to prepare for possible outcomes, a late announcement of tax cuts would highlight that, with the limited powers of devolution, we are still beholding to the whims of Westminster. It is only with this Parliament having full powers that we can have a fiscal policy fully designed and delivered to Scotland to benefit Scotland. This Government is clear on what its priorities are. We are choosing to invest in our social contract, to invest in the people of Scotland and to invest in the Scottish economy. That is why I asked members to vote to ratify the proposed changes to Scottish income tax in 2024-25. Next week on Tuesday, the Parliament will debate stage 3 of the budget. I am sure that debate will be just as robust as it was at stage 1, and just as robust as the questions from all members of the finance committee at stage 2 earlier this week. Today, however, is about the standing orders procedure, which states that its resolution must be agreed ahead of the stage 3 process. I want to use today's debate not just to respond to some of the issues, but I think that it is already very clear why the Scottish Conservatives are so concerned about the Scottish Government's current tax policy, which we believe echoes the concerns of so many sectors across the country, but also some of the inherent difficulties within this particular budget process, not just for MSPs in this Parliament who have been engaged in the scrutiny of the budget, but also for local government too. Back in October, we learned from the First Minister that there was to be a council tax freeze, even if a move like this is actually the remit of local authorities rather than for the First Minister to decide. It was abundantly clear that there was no consultation about this. Allegedly, some of the cabinet didn't even know about it. Local government certainly didn't, and at a time when they were starting to plan ahead for their budgets, they had no idea what the council tax freeze was to be fully funded. Yes, it was, said the Deputy First Minister in the budget statement on 19 December. The council tax freeze was to be fully funded, but the accompanying arithmetic in the budget made it abundantly clear that that was not the case, which is probably why Argyll and Bute council has just voted to increase their council tax by 10 per cent. I will in a minute. Shona Robison finally makes the admission that it was not fully funded. This letter that was received by councils from the Deputy First Minister yesterday makes it very clear that it wasn't fully funded. That has been an issue for this particular budget. I give way to the Deputy First Minister to tell us why she didn't say anything about this at stage 2. The First Minister is conflating two things. One is the general revenue grant position, which we are giving funding of £62.7 million, and the council tax freeze money is of £147 million, so the two things are different pots of money. In terms of Argyll and Bute, Argyll and Bute, which I hope will reconsider their position, are actually going to leave themselves £400,000 worse off than had they accepted the money that is for that purpose. Does she think that that is a sensible decision from Argyll and Bute administration? What Liz Smith thinks and what councils think is that the decisions that have been made by the Scottish Government completely undermine the Verity House agreement and the ability of the Scottish Parliament to be able to improve the financial scrutiny of the budget. That is the issue for this particular rates resolution, because there have been other very significant scrutiny issues within the budget process. It is something that the convener of the finance committee put up on record during stage 2 about the potential behavioural changes following the tax changes. The minister has just responded that the Government is going to keep a watching brief on that. The problem is that that watching brief is going to take place after the changes that have been made. The modelling, which I do not think has been done by the Scottish Government, is not any more extensive than some of the recommendations that have been made by the Scottish Fiscal Commission. We do not know what that modelling process is. It is also exactly the same for the proposed surtax on business rates. I came back to the stage 2 discussions. Cabinet Secretary says that there has been no discussion about that as yet, because the evidence has not been put before. I do not understand how that can become a proposal if the evidence in the modelling has not actually taken place. That is a serious issue for this Parliament when it comes to the budget, because we have to be engaging in the proper scrutiny process and the rates resolution should reflect that. As we know, it is very clear that businesses are extremely worried in Scotland about the effect of the budget. In fact, there has been universal criticism of the budget. When I asked the cabinet secretary to name those sectors that supported the Government's income tax changes, she could not provide me with any names. That is pretty telling. That scrutiny matters a lot. The finance committee was fully accepting of the difficulties that the Scottish Government faces in light of the timing of the Chancellor's spring budget. However, in paragraph 142 of the committee's report, we note that the Scottish Government has so far failed to produce a full response to the Scottish Fiscal Commission sustainability report, which, of course, flags up the large, persistent black hole in the Scottish Government's finances. In recent weeks, this Parliament has witnessed a great deal of discussion about that, and I am sure that we will come to that again in stage 3. I finish my comments on the fact that I am sure that we will, yet again on Tuesday, debate our very different political approaches to the budget. However, what really matters for this rates resolution is the ability of this Parliament to scrutinise what is behind the decisions of the Scottish Government. As yet, we will not, I do not think, as Conservatives, be the only people expressing our very deep-seated concerns. Scottish Labour will not support the rate resolution today. Scottish Labour believes in progressive taxation, but those proposals are far from progressive. As with the rest of the Scottish National Party's budget, those resolutions are devoid of any strategy to help to grow our economy. While changes to the top of the income tax system will raise a paltry £8 million, a far more significant contribution—£307 million—comes from fiscal drag by freezing the threshold for a higher rate at £43,663. It epitomises this Government that the most— No, thank you. I am just getting started. Thank you, Deputy First Minister. It epitomises this Government that the most significant decision they have made is to do nothing. The Deputy First Minister told this chamber that our Government believes that those with the broadest shoulders should pay a higher rate of tax. So, who earns £43,000 in Scotland today? Nurses, teachers and police officers. Ask them. Do they feel rich? Mortgages up. No, thank you. Mortgages up. Rents up. Energy bills up. The price of the weekly shop. Up, up, up. Accounting for every penny. Eking out their household budgets. Hoping the car does not need new tyres, that the boiler does not need fixed, or that the kids need new shoes. Every person in this country earning £28,850 per year pays more tax in Scotland and is getting less and less in return. No, thank you, sir. Those people do not have broad shoulders and they are not rich far from it. In a cost of living crisis, the SNP wants nurses, teachers and police officers to pay more, and all to bail out a profligate incompetent Government that has wasted their money. This week, the SNP's latest tax position, oil and gas companies raking and record profits, should get a free pass. Tax rises for nurses and tax cuts for oil giants. The flagship changes to tax policy, the new advanced rate of 45p and top rate is increasing to 48 pence. That is forecast to raise £82 million, with over half of the unadjusted revenues being wiped out by behaviour change. No work appears to have been done whatsoever on the labour market effects of their tax changes. Labour remains deeply concerned about the impact on Scotland's ability to recruit and retain key workers in our NHS and in our wider economy. Recruiting breast cancer on colleges from abroad, those that do come are negotiating net pay, as the finance committee in the Parliament has heard. Those who do not come are ending up in places with tax rates that they prefer. All the while, the waiting lists in our NHS continue to grow and grow. What about head teachers in our primary schools and national shortage when the work does not seem worth the wages caught by those tax hikes? Nothing done to mitigate the impact in key labour shortage areas through adjusted pay rates or conditions, but the very concept of all that appears to be alien to a Government that seeks tax solely as a means of plugging the hole left by their failure to grow the economy. Those tax rates will not plug the overall gap, of course, but the national shortfall forecast to rise yet further to as much as £1.9 billion by 27.28 billion, and they will be back for more. I have seen nothing from this Government resembling a plan to address that most pressing of challenges, the growth in our economy. Instead, it is out of ideas continually trying and failing to use tax as a substitute for economic growth. Getting our economy growing should be the number one priority. That is an idea for you, Deputy First Minister. If Scotland's economy had grown at the rate of the north-west of England in the last decade, it would be £11.5 billion larger. Just think what that could mean for investment in our public services and in our communities. Instead, we have a chaotic budget of cuts across the board, including key areas that would support that economic growth, colleges, universities and housing that the list goes on. There is no strategy for growth, only for ever-increasing taxes on hard-working Scots, while Humza Yousaf lets oil and gas drives off the hook. In a cost-of-living crisis, as Rishi's recession bites, hard-working Scots should not have to pay the price for the failures of two incompetent Governments. One of the Scottish Government's defining missions is tackling poverty, especially child poverty. In this financial year alone, 90,000 children are being lifted out of poverty as a result of Scottish Government policies. The budget for the coming financial year includes £1 billion of additional social security spending alongside actions such as wiping out off-school meal debt and expanding free-school meals, which the Scottish Greens have been proud to champion. Tackling the big challenges, such as child poverty or the climate crisis, requires huge state intervention. There is not a free market solution to either of those, nor is there a free market solution to healthcare, justice and education, so we need to pay for those things primarily through taxation. Scotland has the most progressive tax system, tax and social security system, anywhere in the UK, as confirmed by the IFS, through our income tax reforms over the past few years. Through doubling council tax on second homes, increasing the additional dwelling supplement and other measures, we are redistributing wealth from the richest and wealthiest to the most vulnerable in our society. That is the litmus test for progressive government, which is why Labour's opposition today is so revealing. The specific further reform in today's resolution ends the frankly somewhat absurd situation where one income tax ban—the higher band—spans £82,000 of income. That is twice the range of the three lower bands in the personal allowance combined. The Scottish Greens were proud to argue for that change, and I believe that it was a personal commitment of the First Ministers from his leadership campaign. However, I want to thank the STUC in particular for their leadership on that, which answers Liz Smith's question of who supports those tax proposals. Scotland's trade union movement supports those tax proposals, and they were the ones to advance them in the first place. I expect and understand the Conservatives' opposition to progressive taxation and well-funded public services, but there is a dichotomy when they simultaneously oppose tax rises for the better off and demand more spending on a wide range of services. I am grateful to Mr Greer for giving way. What is concerning us is the fact that the business community and those who are most likely to be in the position to stimulate economic growth are deeply concerned about the extent of the problems within the Government's budget. Not only in raising tax but also the differentials between Scotland and the rest of the UK. Does he accept that there is deep-seated concern amongst the business community? I am grateful for that intervention, and I accept that the concern is there. However, as I am going to address later, I do not think that it is borne out by the last five years of evidence of progressive income tax reforms. However, I want to focus on Labour's position first for a moment, because it is just astonishing in that the Labour Party is now adopting a near-word-for-word repeat of Tory tax policy. Labour MSPs are fond of saying, as Michael Marra has, that those on £28,500 pay more tax in Scotland. Yes, £6 more a year, and for that they get free bus travel for under-22s in over-60s, free college and university education, free prescriptions. The best-paid public sector workers, like the teachers that Mr Marra referenced anywhere in the UK—no, he has got to be joking, he would not take a single intervention—in Scotland, workers get so much more for that £6 a year, and yet the Labour Party rejects that. It is abundantly clear to all of us that Cure Stammer sets Scottish Labour's tax policies, not on as Sarwar or Michael Marra, but they are the ones left on the public in explanation of where the £1.5 billion pounds of Labour cuts to public services would land. There is an element of the boy who cried wolf here with some opponents of progressive taxation. We have been making those changes for five years, and every time they have declared that this would be the tipping point, resulting in less revenue coming in as people change their behaviour or move south, but the reality is that total tax take is up. A net migration from the rest of the UK to Scotland is positive. A higher quality of public services is a pool factor, which people are willing to pay a little bit more for if they are on an above-average salary. Liz Smith mentioned Sandy Begby, who has a great deal of time for it, but I have to say that every worker is a wealth creator, not just those at the top. Too often, those debates proceed as if the only people driving our economy are the high earners, the chief executives and the company owners. That is not and has never been the case. Ordinary workers are clearly better off in Scotland than in the rest of the UK in terms of the balance of tax and public services that they receive. I believe that a majority, a broad majority in this chamber and across the country want to see a more social democratic and a fairer Scotland. By voting for this rates resolution today, we are taking one further step towards that. Scotland needs predictability and a long-term plan for both tax and the wider economy, not erratic changes that will undermine confidence. The Scottish Liberal Democrats voted for the tax resolution last year, however I warned them about tipping points. High earners are mobile. They can shift earnings to their pensions. UK firms that want to expand their workforce can look to places such as Newcastle, Manchester and elsewhere. The Fraser Avalander Institute analysis suggests that raising the top rate of tax to 48 per cent will raise just £8 million against behavioural change. To put that in context, the SNP's Ferry Fiasco stands at about £250 million over budget as chicken feed. Listen to what the BMA says. On the new advanced £75,000 tax rate, Dr Ian Kennedy said that the measure may push more of those doctors out of the NHS to jobs elsewhere or even to retirement. Between those changes at the top rate and the advanced rate, the Scottish Fiscal Commission says that the behavioural changes could be as much as £118 million next year. However, there is a contract here as well, because the biggest increases in the overall tax take will actually come from fiscal drag on low and middle-income earners. That is an SNP Green Government that is taking tax to higher and higher levels without understanding the impact on behaviours or the economy or on those already struggling to get by. I am afraid that the minister had no time for interventions. I have considerably less time than him. I have to make progress. Taxpayers and businesses have no idea what is going to happen next. This is not an environment that is conducive to growth and giving people the confidence to invest here. Moving overnight from a position of hiking council tax by record amounts to freezing it again speaks to a Government that is reactionary and operating without any sort of vision for a tax strategy. An SNP tax plans just don't work. They added a further penny on tax last year with the defined purpose—a purpose that we supported—of supporting our NHS. The crisis in our health service has not got any better, while the IFS has warned that health spending is actually set to drop in 24-25. The social contract at the heart of this is being stretched to breaking point. Tax is being ramped up in an attempt to cover SNP failure to grow our economy and hide the incompetence and waste that is embodied by the ferries, but exists in so many other portfolios as well. SNP's choices mean that Scotland has missed a big opportunity to raise revenues that could have allowed different decisions on tax and public spending. Members will recall my long-standing objections to how Scotland's leasing process was run. It sold Scotland's prized seabed for windfarns on the cheap, achieving only a fraction of the prices being seen elsewhere in the world. It inexplicably capped the price that companies were allowed to pay for Scotland's sites, botching the best chance for generations of bringing serious money into our Scottish economy. Almost half of that money—£310 million from the 10-year licences that were sold in that auction—will be spent in the current year alone to prop up SNP green spending and financial mismanagement. The problem is that once that money is gone, it is gone. Those rights are only sold once. No annual payments exist, as happens in England. We will be waiting five to 10 years for more money to start arriving in the form of rents on the as-yet unbuilt windfarns. The Government is burning through this cash without a plan for what happens to public services afterwards. The excuse that it is spending money on the journey to net zero just doesn't fly when we have a budget before us that strips money out of green initiatives left, right and centre. I thank the members for their revealing contributions this afternoon. Liz Smith makes very measured contributions and reflects her own political philosophy. We have a fundamental difference in that. There is a key issue here, which she speaks about, modelling and what the consequences of decisions might be. Of course, that is something that will come out and we will monitor. We will have updated forecasts and outturn eventually, but what we do know is what the consequences would be of not taking these decisions. That is what I touched on in my opening remarks. It would mean cuts to public services. That is simply not something that we can sustain. We are committed to our social contract and we are committed to investing in the people of Scotland. That is why we put forward progressive tax policies to enable us to achieve that. I am afraid that I have only a very small amount of time. I want to address a few other points before concluding. I am very grateful to Ross Greer for his contribution. He makes a very powerful point, recognising the contribution of everyone across Scotland to creating wealth in our society and to supporting a sustainable and prosperous economy. That is something that we have to bear in mind. We recognise that the majority of taxpayers in Scotland will be paying less tax than they will if they were living south of the border, not simultaneously enjoying a range of benefits that are not afforded to our friends and neighbours in England. I turn to the contribution of the Labour Party. There were two principal criticisms on the rates resolution from Mr Marra. It was with regard to the point at which people in Scotland pay more tax than they do in England and it was also the point around the higher threshold. That is the situation that prevails today. It prevails today because we had a rates resolution vote in Parliament in February of last year. The Labour Party voted for that. Not only did the Labour Party vote for it, its finance spokesperson stated that he welcomed those proposals and that they were progressive. We are not even to the end of the tax year. Proposals that are described by the Labour Party as progressive are now introduced by the leader of the Labour Party as being ludicrous, from progressive to ludicrous in one financial year. That is simply not a sustainable position to engender credibility at all. Mr Marra also criticises the introduction of the advanced rate of £75K. That is welcomed and called for by the STUC, by anti-poverty campaigners. Again, we are the Labour Party finding itself on the wrong side of the STUC and anti-poverty campaigners. It is shameful. However, as I touched on in my remarks earlier on, because of the changes that are taking place to national insurance, that means that there will be not an employee in Scotland earning less than £100,000 who will be paying more tax next year than they are this year. No one earning under £100,000 will be paying cumulatively more tax next year than they are this year. Let me take you back to the Labour manifesto in 2020-21. Scottish Labour believes that income tax should be fair and progressive. If there is a need to increase income tax revenues during the next parliamentary term, Scottish Labour would support changes that generate income from those earning more than £100,000. It contradicts its position last year that they are against the STUC and anti-poverty campaigners and they are against their own manifesto. If I was being charitable, I would characterise it as a U-turn, but to make a U-turn you actually have to be in the driving seat. We know that the front bench of the Labour Party has been taken for the ride by Keir Starmer. I urge members to back this progressive race resolution to see me. That concludes the debate on Scottish Members. Let's just cease the conversations. That concludes the debate on the Scottish Income Tax Rate Resolution 2024-25. We will now move on to the question on the motion. Rule 11.3.1 requires the question on the Scottish Rate Resolution to be put immediately after the debate. The question is that motion 12252, in the name of Shona Robison, on Scottish Income Tax Rate Resolution 2024-25, be agreed. Are we all agreed? The Parliament is not agreed, therefore we will move to a vote and there will be a short suspension to allow members to access digital voting.