 I call on the cabinet secretary to speak to you and to move the motion. Today the Scottish Parliament votes to set all rates and bands for Scottish income tax. This is our opportunity to use the powers of this Parliament to build a fairer, more prosperous country and put our progressive values into action. In November we published the income tax discussion paper, which set out four tests that we believe any income tax policy change it must meet. The civic engagement was well received and allowed for constructive engagement in the tax setting process. Our four tests were to help to maintain and promote the level of public services which people in Scotland expect, ensure that lowest earning taxpayers do not see their taxes increase, ensure that any tax changes make the tax system more progressive and reduce inequality and, along with our decisions on spending, support the wider economy. It is unclear that the proposals before you today do indeed pass those four tests, and I am asking the Scottish Parliament to agree with my motion, which, for the tax year 1819, will raise an extra £219 million to invest in public services, tackle poverty and support Scotland's economy, and protect those on low incomes, making the system fairer and more progressive. The new starter rate, combined with an increase in the personal allowance, will result in 70 per cent of all income taxpayers paying less tax than they do this year on current incomes. That means that no one who earns less than £33,000 will pay more than they did last year, and more than half of taxpayers will pay less than if they lived in the rest of the UK. Those proposals mean that, for the majority, Scotland will be the lowest tax part of the UK. Murdo Fraser. I am grateful to the cabinet secretary for giving way. We would like to take this opportunity to apologise to the 898,000 basic rate taxpayers in Scotland who, perhaps, believed the SNP's manifesto commitment not to increase the tax that they were paying and were content to voting for them as a result. Will he apologise? A majority of basic rate taxpayers will pay less tax under this Government's proposition. I am sure that they would welcome that. I do not know why Murdo Fraser objects to Scotland being the lowest tax part of the UK. That is, of course, because it is not taxation for the richest in society, which seems to be clearly the only interest of the Tory party. The richest in society and those vested interests is who the Tories represent. As I have said, no one who earns less than £33,000 will pay more than they did last year, and more than half of taxpayers will pay less than if they lived in the rest of the UK. As I have said, that makes Scotland the lowest tax part of the UK. They were surprised by that on 14 December and the Tories are still surprised by that fact, but I will take an intervention from the Labour Party. Elaine Smith. On that point, can I ask the cabinet secretary if he does not think that it would be fairer and bolder to ask the wealthiest to pay more tax in this country so that we can actually begin to tackle child poverty? What I would say in reply to Elaine Smith is that that is exactly what this Government is doing. That is exactly what we are doing. However, in contrast to what the Labour Party is proposing, by doing it in a proper fashion, we will actually raise the revenue to invest in public services, rather than allow for tax behaviours, will mean less resource for the next year. That is the reality, as verified by SPICE, the Fiscal Commission and the Council of Economic Advisers. I think that the Labour Party should do their homework when it comes to tax setting in this country with the powers that we have. The tax decisions that I have taken have enabled me to reverse the real-terms cut that has been imposed by the UK Government on our resource budget and continue to invest in our public services, in our people and our businesses, enabling them to develop and thrive. We are a Parliament of minorities and must work across the chamber to find compromise and consensus so that we can give support, sustainability and stimulus to our economy and our public services. Reaching consensus is indeed a task for us all, and I thank those members who have engaged properly and constructively. Since the Scottish Parliament gained powers over income tax, this Government has been completely clear in its ambition that income tax should be fair and progressive, whilst also supporting the delivery of vital public services and enabling investment in the economy. Overall, the Scottish Government's use of the devolved income tax powers will deliver an additional £428 million next year to support a budget that will protect our public services that are free at the point of use, including free prescriptions, free personal care and free tuition. We will invest an additional £400 million in Scotland's national health service and will provide above-inflation investment in the police, in our universities and colleges and in local government services, the length and breadth of Scotland. I am confident that those proposals will deliver the best outcomes for the people and the economy of Scotland, the best deal anywhere in the UK. Tax powers are not a political toy. They have an impact on individuals and the economy and the decisions that this Government has made has to be seen in the context of the UK Government's continued pursuit of budget cuts and the harmful effects that this has had on Scottish Government funding. What that means is that those Scottish taxpayers with the broadest shoulders are being asked to contribute more to support investment in Scotland's people and Scotland's economy. We must also keep in mind that no-one, for a given income, will see their income tax increase by more than 1 per cent of their gross salary next year, yet collectively, those changes will raise an additional £219 million for investment in our economy and our public services. Those desperate to present those changes as a major risk to Scotland's economy are simply wrong. The Scottish Fiscal Commission has stated that the tax impact on the economy will be negligible. The tax that an individual pays is only one part of the equation. Not only is there a direct benefit to the individual and being able to access a broad range of quality public services, there is a wider benefit, both now and for the future, from the investment that this budget is making. The current devolved income tax powers are indeed significant, however, as decisions over the income tax base remain reserved to Westminster, their use is either constrained or could result in unavoidable consequences impacting on Scottish taxpayers. My officials and I have been working with HMRC to ensure that any administrative consequences are resolved. To this end, I have reached agreement with the UK Government that Scottish taxpayers paying the starter or intermediate rates of tax will retain their eligibility for marriage allowance. The UK Government confirmed yesterday that Scottish taxpayers will continue to receive pensions relief and other allowances on the same basis as the rest of UK taxpayers. Of course, that would be easier if Scotland had full powers over income tax. Future revenues—no interventions, despite the noise coming from the Tory benches—future revenues for the Scottish Government will be driven by both our policy choices and by the relative growth per capita in our tax receipts. That is why this Government continues to invest in Scotland's economy and its workforce to improve the prospects for economic and employment growth. Indeed, that investment will come at a time when Scotland's economic performance has remained resilient despite heightened economic uncertainty as the UK moves closer to leaving the EU. It is encouraging that the latest Bank of Scotland PMI reported that business optimism in Scotland is at a three-year high. In addition, Scotland is also benefiting from continued near-record low unemployment, demonstrating the on-going strength of the Scottish labour market. As well as our four tests, we follow the Adam Smith tax-making principles of certainty, convenience, ease of collection and proportionality to the ability to pay. Delivering certainty over income tax policy was raised as an important issue during a series of round-table events. We recognise the importance of certainty to Scottish taxpayers and to business. The income tax discussion paper marked our intent to debate and reach a decision over income tax arrangements, which will be fit for purpose, now and into future. The proposed income tax policy meets the four tests and the Adam Smith principles. I believe that we have a settled structure in income tax policy and should provide certainty over the remainder of this Parliament. The Independent Scottish Fiscal Commission is responsible for forecasting Scottish income tax receipts, which determines the funding that is available from HM Treasury in 2018-19. Their forecasts show that there will be growth in Scottish income tax receipts for every year over the forecast period, and the forecast per capital growth is expected to be greater than that in the rest of the UK. Will the cabinet secretary confirm that the Government is able to submit its own forecasts in relation to income tax receipts and therefore change the amount that has been deducted from the Scottish budget by the Scottish Fiscal Commission? HM Treasury will only release for the Scottish Government to draw down what the SFC has forecast as the appropriate amount. That is the reality. That is the guidance. A Government with the best will in the world cannot just make up the amount of resource that it would like to have, it is the resource that the SFC has said is the appropriate amount. It is that mechanism that drives what the Scottish Government has at its disposal. Even though the Labour Party, with all the other mistakes and adequacies in it, even though there was an alternative budget, can escape the fact that Treasury will only give us resources on the basis of which this Parliament, of course partly called for by the Labour Party, agreed that we were bound by such a formula. However, the sum of what we will have at our disposal is important due to the decisions that we have taken on public sector pay, which the SFC forecast will boost income tax revenues by £62 million in total. Should local government decide to follow a lead on pay, and they certainly have the resources at their disposal to do so, it will boost that further. A recent UGIV poll shows public support for our proportionate approach, with more than half of Scots supporting our income tax proposals. As a result of UK Government voting between 2010-11 and 2019-20, the Scottish real-terms discretionary block grant will be cut by £2.6 billion. With £500 million of cuts in the next two years alone, this is not the time when we should further tax those at the lowest end of the income tax spectrum. I see how the Tories sneer when you mentioned those at the lowest end of the earnings table. I am proposing that we protect the lowest earning taxpayers in producing a more progressive tax system contributing to greater tax fairness in Scotland, whilst raising additional revenue to support vital public services and invest in the economy. I believe that those actions, alongside the spending plans for 2018-19, will make Scotland a more attractive place to live and work with access to many services that are not available elsewhere in the UK. Living in Scotland ensures access to an NHS that is well funded, gives fairness and families access to increasing amounts of free childcare. It means that students pay no education tuition fees, there is no prescription tax on animal health and the older generation can benefit from free personal care. In an international context, Scotland's overall tax as a proportion of GDP was below the OECD average in 2016, again reinforcing that Scotland is not a highly taxed economy. The steps that we are taking today will ensure that it is a fairly taxed country. To that end, I move the motion in my name. Colin Murdoff Fraser, to open for the Conservative Party. Thank you, Presiding Officer. It feels like we have been debating the Scottish Government's budget for months now. Indeed, we have a reprise of this debate coming up tomorrow, with the stage 3 budget debate. Hooray, say the voices behind me. We are all looking forward to that. It might seem at this stage in the process that there is little new to add. Nevertheless, I think that there is no harm in reminding the chamber exactly what the Parliament will do today if it is passed by this Parliament. It will break a promise made by the SNP in its manifesto in 2016 not to increase the basic rate of income tax, a promise repeated over and over again by the First Minister and many other SNP figures. Of course, I am sure that Mr Mason will associate himself with that manifesto commitment. John Mason. I associate myself with the manifesto commitment and I thank him for giving way, but would it not get that a manifesto can only be fully brought in if there is a majority Government and we have a minority Government and it cannot bring in all of its manifesto commitments? Well, Mr Mason, the Conservatives stood ready to vote with a Government, prepared to meet their manifesto commitments to keep taxes low. Mr Mackay spurned my advances to join the tax payers alliance to protect the people of Scotland from these high taxes, but no. Nicola Sturgeon was quite clear on numerous occasions and she said, and I quote directly, that she was not right to increase income tax for those who are on the basic rate. That is a promise made 53 times in 2016 and 2017, not just by Nicola Sturgeon but by a whole range of SNP figures. We have not heard from Mr Mackay or from Mr Mason on apology, but perhaps one SNP speaker in this debate will have the courage to apologise for breaking their manifesto commitment. If the Parliament today passes that rate resolution, that promise will be broken. Some 45 per cent of Scottish taxpayers, over 1 million people, will be paying more tax than if they lived south of the border, making Scotland the highest tax part of the United Kingdom. The overall burden of income tax in Scotland will be higher in Scotland—not at the moment, Mr Mackay—in other parts of the UK. The SNP seemed to want to portray their tax increases as affecting only the rich. This is the message that we just got from Mr Mackay. He claimed that anyone earning more than £33,000 will be paying more tax as a result of those changes. Anyone earning less than £33,000 will be paying less. What they do not see is that figure is where it is. Because of the actions of a UK Conservative Government increasing the personal allowance that every taxpayer in Scotland benefits from, it is the actions of a UK Conservative Government since 2010 effectively doubling the personal allowance that has lifted millions of the lowest paid out-of-tax altogether and reduced the tax burden from countless others. Will he finally drop the pretense that increasing the personal allowance is a progressive move? It has been demonstrated time and time again that the bulk of the reduction in revenue that is foregone by Government as a result of those measures goes to higher than average income households. The lowest earners gain nothing at all because their incomes are already below the personal allowance threshold. Murdo Fraser. It is simply wrong on that. The millions who have benefited from seeing their incomes taken out of tax altogether will disagree with him because people who are the lowest paid, not the absolute lowest paid, but people in that bracket earning between £6,000 and £12,000 have been lifted out of tax altogether thanks to a UK Conservative Government. It is worth remembering, too, that when those on the SNP benches claim that the lowest earners, as a result of their plans, will get a reduction in their tax bills, the maximum reduction coming in in April will be some £20, not £20 a week, not £20 a month, but £20 a year. At the same time, thanks to the actions of a UK Conservative Government increasing the personal allowance in April, the same beneficiaries of that reduction will get a £70 reduction in their income tax bills. The changes in April will mean that a UK Conservative Government is being three and a half times more generous to the lowest paid than this SNP Government is, and we are doing it at a UK level without penalising those earning a bit more as the SNP are doing. What the measure proposed by the SNP today means is that everyone earning over £26,000 a year will pay more tax in Scotland—not just now—than if they live south of the border. A nurse earning £30,000 a year will pay £40 more. A primary school teacher, a social worker or a paramedic earning £35,000 will pay £90 more. A police officer or a secondary school teacher earning £40,000 will pay £140 more and a GP earning £70,000 will pay more than £1,000. A 45 per cent of taxpayers will be paying more than their equivalents south of the border. Despite what the cabinet secretary says, those are not rich people, they are not the rich, they are hard-working individuals who should be allowed to keep more of what they earn. Murdo Fraser and the Tory Party support the pay rise for the workers that he has just mentioned as proposed by the Scottish Government. I think that local government workers would like to know if they are getting a pay rise too, because there is nothing in the Scottish Government's budget for local government that is going to deliver that, as I will hear more about tomorrow. In many cases, those individuals might be the only income earner in their families, because a household income of only £26,000 covering one or two adults on the number of children is hardly a generous sum, so we need to stop hearing more about how only the rich will pay more under those plans, because it is hard-working ordinary families who we are talking about and those who can ill afford to pay substantial sums. The question of the unintended consequences of those tax changes. The cabinet secretary mentioned the married couples allowance, only available previously at the basic rate, worth £200 a year. It is a significant sum to many people, particularly retired couples or those on low incomes. A measure that is brought in by a UK Conservative Government, I would remind Mr Mackay. I am pleased that, thanks to the co-operation and the reasonableness and the generosity of UK Conservative Treasury ministers, a solution has been found to this particular problem that people in Scotland will be able to retain the married couples allowance. Once again, the Conservatives are having to clean up the mess that the SNP has created in the tax system, so I am pleased that that has now been resolved and we can reassure all the people who have been writing to us that they are able to keep their married couples allowance. However, there are other issues for unintended consequences, such as gift aid. How will gift aid continue to apply in relation to donations to charity in Scotland? How will that be affected? For example, will the tax on pension drawdowns be affected? What homework has the cabinet secretary done? What engagement and relationship has he had with UK Treasury ministers? I am happy to give way if he wants to explain more. As Murdo Fraser knows fine well, as we have debated this at the committee, all those matters were raised by the Scottish Government in the early days of the proposed changes to income tax policy. Those issues are in the gift of the UK Government, but they have written to me that they have now been able to share with the finance committee the resolutions to them. However, I have had to wait for the UK Government to respond rather than give me early solutions. They have now positively responded. I am sure that Murdo Fraser and the whole chamber will welcome that outcome. Murdo Fraser. I am sure that that outcome will give great reassurance to the many people who are concerned about those issues, not least the many charities in Scotland who rely upon that gift aid income. It would not be better if, before he announced those changes, the cabinet secretary sought agreement with the UK Treasury in advance if he had to wait when he announced them, he could give reassurance to people at that particular time. Apart from those questions of process, what worries us from those tax rises is the impact on Scotland's economy. Just last week, the Scottish Retail Consortium warned about the likely impact on economic growth of those tax rises. The Scottish Retail sales monitor for January showed that Scottish sales fell by 0.7 per cent on a like-for-like basis compared with January 2017. At that time, the SRC expressed its concern about income tax and council tax rises and the consequences for consumer spending. Those were concerns backed by the Scottish Chambers of Commerce, who said, and I quote, "...we have warned repeatedly about the threat of Scotland being perceived as a relatively high tax economy and how that impacts on business investment and consumer behaviour. We will be watching shoppers' behaviour closely in the months ahead for signs of restricted consumer spending and tightening disposable income." Those messages are stark. The cabinet secretary tries to dismiss those raising these concerns about the impact of higher taxes, but that is what every business organisation in Scotland is telling us. Inflation is going up, food and fuel prices are rising, council taxes are expected to go up across Scotland by 3 per cent in April, wages are not increasing fast, and on top of that we have the additional income tax burden being imposed by the Scottish Government on 45 per cent of Scottish tax players, a clear breach of the promise that it made in its manifesto in 2016. Our view, Presiding Officer, is that the Scottish Government needs to start listening to all those voices expressing concern. Every economic forecast, as the Scottish economy growing at a fraction of even the UK average in coming years, that was the stark message of the fiscal commission's projections published at the time of the budget and is one being repeated by other economic forecasters. What we know is that if the Scottish economy grew at even the UK average for the period from 2007 to 2022, over that 15-year period that would be worth an additional £16.5 billion in cash terms to the Scottish economy. That £16.5 billion lost the price of our failure to match the performance of the UK economy as a whole. Just think what the faster-growing economy could do in terms of expanding our tax base and providing more cash for our public services. It would avoid the need for the tax rises that we are talking about today. Rather than focus on initiatives to grow the economy, the SNP is determined to increase the tax burden and send out a message that Scotland is the highest tax part of the United Kingdom. Minister, today's increase in income tax in this rate resolution penalises hard-working families. It breaks a promise made by the SNP in 2016 and repeated more than 50 times since and in making Scotland the highest tax part of the United Kingdom. It will condemn us to years of sluggish economic growth and deprive us of much-needed tax revenue as a result. For all those reasons, Parliament should reject the rate resolution before us. The new tax powers were a chance to present a bold and radical budget. The SNP tax plans fell massively short of what is required. It is the people of Scotland who will suffer, with a quarter of a million children living in poverty, performance and education on the slide as the economy continues to the falter. An NHS crisis where people struggle to get GP appointments. Those tax proposals should be rejected because the SNP has failed to make the changes that will make a difference to people's lives. The fundamental issues with the SNP's tax proposal are that it fails on two points in terms of both the money and the process that has been followed. When you look at the scale of the challenge that is faced by Tory austerity, the amount of money raised by the SNP tax plans falls way short. The Fraser of Islander Institute shows that, even taking into account the stage 1 amendments that were made, there are only £83 million available in additional funding. Once business rate deductions have been taken into account. That is all that is available. That is not progressive taxation that is a massive shortfall. That comes against a backdrop of the SNP voting seven budgets in a row to penalise local government, resulting in cumulative cuts of £1.5 billion. It is not just the figures, it is the impact that that has had on local communities. Jobs lost, libraries closed, community projects closed down, all as a result of SNP budget decisions. The rate resolution that we have before us this afternoon does not address the scale of the problems that are faced in Scotland's communities. I think that there are also some flaws in the process that Mr Mackay has followed. He has made great play of the behavioural aspects of taxation. When Mr Mackay submitted his tax proposals to the Scottish Fiscal Commission, they were downgraded by 56% million pounds, something that was accepted by Mr Mackay. We have not heard anything from Mr Mackay or the Government in terms of what went on at the challenge meetings, which are part of the process and what representations he made in order to try and save that £56 million to be included in the budget. James Kelly suggested that I, as a minister, should interfere with the Scottish Fiscal Commission's actual forecast just because I have a different opinion. Are you suggesting that I interfere with the evidence that they have given to me? I am saying very clearly to Mr Mackay that there is a notice on UN legislation. If you agree with that forecast, you can produce your own forecast and you can provide a written explanation to the Parliament. What in effect happened in the process was that you put in your proposals, they told you that there were 56 million pounds less and you wrote the figure down and said thank you very much and then included that in the budget. That meant that we had 56 million pounds less to spend on the NHS, to invest in public services and to properly support the funding of public sector pay. You could have looked at alternative models and you could have looked at alternative forecasts. That has been looked seriously by some of the Parliament's committees. We have seen international examples where there are variances in taxes in US states and the Finance Committee looked closely at what happened in Switzerland where there are different tax rates and the behavioural aspects that the Finance Committee noted were minimal. You had an opportunity to challenge that to come up with your own forecast. We do not know anything about the process. You might have challenged it but the reality is that the budget is 56 million pounds less because you accepted that forecast and there were alternative methodologies that certainly could have been used and examined. In terms of the Labour plan, our proposal, we think that what the Government has come forward with is far too short. We have proposed a £960 million plan to invest in the Scottish budget. That was required. If you look at the level of the cuts that local councils are facing, even taking into account the settlement that was announced at stage 1, there is still a £368 million shortfall. Bruce Crawford. First, let me congratulate the Labour Party. At least the Labour Party brought forward proposals for this Parliament to discuss, unlike the Tory party, who just wanted to cut the budget by £500 million. The devil is always in the detail. In that £960 million, how much will you raise in next financial year from your tourism tax? James Kelly. The Government had the onus to bring forward in terms of the tourism tax. The Government can have brought forward emergency legislation that would have invested £70 million in next year's budget. I will tell you what the difference between our approach and the Government's approach. What we have heard from Mr Mackay is a litany of excuses as to why he cannot raise tax, produce a substantial investment plan that addresses the issues that are at the heart of Scotland's communities. The reality is that he did not have the political will to bring those plans forward. The plans tinkered round the edges that were made. I do not think that it is right that MSPs should only be paying £29 more a weekend tax. Surely we can do much more than that as a Parliament. What has happened, in effect, is that, if you look at the SNP after 10 years, the approach to that tax rate debate sums them up. There is a complacent attitude at the heart of the Government. You do not have to go too far from this Parliament to find people sleeping rough on the streets, to find children who have got holes in their shoes and families cannot buy them proper clothing to go to school. We have seen in the last 24 hours the level of drug deaths in Scotland at the highest in the EU. Those are all issues that would be of real concern to the Parliament. Those are real challenges, but when you raise them, it strikes me that what the SNP does is they shrug their shoulders and say, we are doing our best, do not criticise us. Let me tell you that that is simply not good enough. We have had too many excuses. What we needed was a much more ambitious tax plan. We needed a budget rooted in fairness, but also designed to invest in public services and support economic growth. We needed a budget that would meet the big challenges and produce an alternative that would deliver for Scotland's communities. In that regard, the SNP rate resolution and the SNP budget falls way short and we should reject it at 5 o'clock. I am delighted to have the opportunity to speak in a debate on a decision that will give effect to the radical opportunity that we have to build a fairer tax system for Scotland. Derek Mackay opened a debate saying that he wanted to put progressive values into practice. What that means has to be raising more revenue for the vital public services in every community of Scotland that we all depend on, while protecting low earners and reducing inequality. That is what it means to have progressive values in the use of income tax powers. Those were the principles on which the Scottish Greens nearly two years ago published our proposals, in the run-up to the Holyrood election. At that point, we were the only political party putting forward a credible, costed, well-worked-out plan that could achieve that, raise revenue, reduce inequality and protect low earners at the same time. It is worth recalling what the SNP's reaction was to those proposals and why their reaction was what it was. They completely rejected the idea of more rights and bans to make a fairer system, as we were proposing. During those election debates, Nicola Sturgeon repeatedly challenged the Labour Party on their proposal simply to increase the basic rate as a whole. Her reason for doing that was that that approach would hit people on lower-than-average incomes. That was true. That was a fair argument to use against a blanket increase in the basic rate of income tax. However, what the SNP had no answer for at that time was our proposal for more rights and bans to ensure that we can raise revenue while protecting those low earners, doing both raising the revenue and what Nicola Sturgeon said she wanted to do is protecting low earners. I hugely welcome the progress that the SNP has made to date, as well as the progress that the Labour Party has made in dropping its proposal for a blanket increase in the basic rate and proposing ideas that we have been talking about for years, such as a derelict land levy, not a land value tax, a derelict land levy and a visitor levy. Things that we have been advocating but which would take the time to legislate for. I hope that we have had the opportunity to continue to work together on that. I give way to Mr Fraser, who is asking me. I am very grateful to Mr Harvie for giving way. I wonder if he would reflect on the fact that, in the Scottish Parliament election in 2016, 65 per cent of the voters endorsed parties, the SNP and themselves, who were opposed to any increase in the basic rate of taxation. What level of support did his tax plans have at that time? Patrick Harvie. Our tax plans, I am very pleased to say, have shifted the debate across the political landscape in Scotland far more than his plan to simply copy, to simply copy the tax cuts for high earners only that his party remains committed to at UK level. There is a further criticism that I continue to make of the SNP, because the use of rhetoric around being the lowest tax part of the UK, I am afraid, falls into a trap that is being set. It fails to commit to that direction of travel. It is a little bit like that simplistic rhetoric around continually increasing the personal allowance. When you add £500 to the personal allowance, you take a tiny sliver of the workforce out of the income tax system altogether and they save the small amount of income tax that they would have been paying, but so do high earners. High earners get that benefit from increasing the personal allowance as well, where it is not a progressive approach. This country should not be competing with our neighbours as a low tax environment, because we know the consequences of tax competition. Those consequences are austerity, inequality, ever-growing tax avoidance and the real human consequences, like the return of food poverty, on a scale that I think most people in this country thought would never happen again. I put to the Scottish Government that they should not be using this rhetoric to compete with our neighbours and certainly not to compete with the current Conservative UK Government on the notion of tax competition. Fair progressive use of taxation is a prerequisite for a civilised society. Is this package being put forward today perfect? No. I have been very clear that we put forward further tax proposals to the Scottish Government. Fully worked out and in plenty of time to ensure that they had the opportunity to scrutinise them. I wish that others had done the same as well. If other Opposition parties had engaged in that sense, I think that there would have been even greater potential to push the Scottish Government beyond its comfort zone. However, the reality of a period of a period of minority government is clear. It is inevitable that political parties will disagree, but if we all dig in our heels and demand perfection or nothing, then nothing is what we will achieve. What today's rate resolution achieves—and I am very pleased that the Greens have played a pivotal role in bringing us to this point—is a huge step, a bold reform to our progressive use of income tax powers, reducing inequality and funding our public services. I will be happy to support it tonight. The substantial new powers that have been delivered by and driven forward by the coalition Government changed the nature of the debate in the Parliament today. We must now be conscious of the impact of money in people's pockets, as well as the money in the public sector and the funding of our public services. It is a delicate balance. We need to work really hard to make sure that balance is right. We need a frank and open debate about those powers to make sure that we are getting that balance right. That debate needs to happen before elections and after elections. Liberal Democrats were frank at the last election. We said to the voters that we would raise income tax by a penny, to raise £500 million for education. Our assessment was that, because Scottish education had gone from one of the best in the world to just average, we needed to make that investment. We needed to ask everyone to pay a little bit more in order to have that transformational effect on our education system. We were very clear about our priorities. We were honest with people about what we would expect them to pay. That was our approach in the election. It is one that we regret that the SNP did not take because Nicola Sturgeon stood on platforms during that election campaign and she promised that there would be no increase in the basic rate of income tax. I have viewed that with astonishment at the time because there was a self-professed left-wing Government at the height of its authority. Everybody expected it to win the election. There were very real strains on public services but it sat and did nothing. It never brought forward any radical proposals to amend the complaints that they had about the money that they were receiving from Westminster. No longer could they claim that it was all Westminster's fault when a major financial provider remained untouched, but the rhetoric was exposed at that time for all to see. Now we have an SNP Government that will increase the very tax that they said they would not at the election time. The question now is about their integrity more than anything else. Can they be frank with the voters about what they are proposing? I know that Derek Mackay has got his answers about being the lowest tax part of the country for a certain number of taxpayers, but the reality was that he said during the election that the basic rate of taxpayers would not see an increase. They are now seeing an increase. There is a lack of frankness from the SNP, which is perhaps not just now. It is important that the SNP reflect on their behaviour before the last election and understand why people are frustrated with their lack of honesty at this very town. However, the tax that they pose today is not something that I can support. It does not deliver the transformational investment in education that we believe that we need to make. Without that transformational investment in education, we cannot support the SNP's proposals. We believe that it is important to get that balance right between asking people to pay a bit more and the investment that we get. I think that it is really important to be specific about how you are going to spend the money so that people can see the results from their investment. You have to have confidence in the tax system and how it operates in order for people to accept the decisions that are made by this Parliament. We are not a party of automatically high-tax or low-tax. You have to make the judgment at the time that is right for the investment in public services and balance up what is needed by the private citizens and the money that they need to make ends meet from day to day. I do not think that the budget matches the requirements and the aspirations. However, the Conservatives need to be careful as well, because they claim to be a party of the economy. However, they are the party that is overseeing the drive towards a hard Brexit that will damage our economy. They need to be very careful when they criticise anyone else for economic irresponsibility, but they also need to understand and reflect that they are a party that is advancing tax rises in England. We have seen a tax rise proposed for care. We have seen a tax rise proposed for the police in England. We have seen councils in Scotland run by the Conservatives that are proposing tax rises. The Conservatives are against tax rises for the better off. They are just in favour of tax rises for everyone else. That is why they need to be honest as well about what their approach to taxation is as well. Today's debate is a great disappointment to us that we are not able to make that investment in education that we desperately need for this country. The Scottish education system used to be the pride, I would say, of the world. People used to look to us for what we were able to do with our young people. Unless we start investing properly in nursery education, in schools and in colleges, we will see a continual decline in the performance of our education system. That will have a dramatic long-term effect on our economy. Willie Rennie, in the use of the term us, is that a nuzz of five or a nuzz of three? Willie Rennie, as the minister knows, is very clear about what we view the budget at. Our MSPs have been very specific in the Northern Isles that they were prepared to stand up for their constituency under the threat of an SNP Government that was not going to deliver on their promises for the Northern Isles ferries. We were not prepared to go along with that. That is why the Liberal Democrats will oppose the tax resolution that is proposed by the SNP today, because it does not meet the ambition that we have set forward for this country. Ivan McKee, to be followed by Bill Bowman. Mr McKee, please. The debate today is about tax, but it is also about credibility. The stark contrast between a Scottish Government that takes responsibility for putting together a budget that serves the people of Scotland and a Tory Opposition that not only focuses on the top 15 per cent of earners, but worse than that, a Tory Opposition that cannot even get its numbers to add up. Let's start by reminding ourselves of the facts. The majority of taxpayers and the vast majority of basic-rate taxpayers are better off under this Scottish Government's budget. 70 per cent of Scottish taxpayers will see their tax bill reduced next year. Most Scots pay less income tax under this Government's proposals than they would if they lived in the rest of the UK or under the proposals from the Tory Opposition. That is only part of the story, because individuals and families do not just look at their income tax in isolation, they look at their total tax position. With council tax increases capped at 3 per cent in Scotland, but the rest of the UK increases up to 6 per cent. The average council taxpayer in Scotland is now almost £500 better off than it would be if it was down south. That is real money for real families and it counts. What counts is the higher level of services that the people of Scotland benefit from. No tuition fees, no prescription charges and the best performing health service in the whole of the UK. Let us be clear that Scotland is the lowest tax part of the UK and it is the fairest tax part of the UK. That is a budget that delivers for business. Business organisations demanded shifting increases in business rates from RPI to CPI. That is delivered by the Scottish Government. Continuing with a small business bonus, meaning that more than 100,000 Scottish small businesses pay no rates at all and total business rates mitigation in Scotland of £660 million will help to real businesses that are delivered by the Scottish Government. £270 million more for economic development portfolio to allow the Scottish Government to continue to support ambitious businesses to grow and to export and to intervene, as we have seen in so many cases, to save threatened businesses so that they can survive and thrive. £600 million for the role of superfast broadband to 100 per cent of homes and businesses in Scotland by 2021, putting the tiny sums invested by the UK Government in this programme into embarrassing perspective. The Scottish Government is doing the heavy lifting to bring Scotland's internet infrastructure up to world-class levels despite broadband roll-out being a reserved responsibility. Westminster is not at the table. With an eye on the future of manufacturing industry in this country, key to our export growth agenda, investing and establishing the National Manufacturing Institute, welcomed by business organisations across Scotland. Under income tax itself, the Scottish Council for Development and Industry is clear that this is a progressive and mature use of Scotland's income tax powers, they say. Because this is a budget focused on economic growth and it is a budget that is economically literate with numbers that actually add up. Meanwhile, from the Tories all we hear is jam tomorrow. Extra demands for public spending that Tory members stand in this chamber and demand every day of the week, now there are more than 100 demands for more public money. Uncosted and just as well because of no idea how to pay for it. Even before the question is asked how the Tories alternative reality budget would pay for public sector pay increases, all the investments have outlined that business organisations are crying out for. That before they explain how they would fund tax cuts for the better off or how they would fund the £200 million cuts in Scotland's revenue spend budget next year is a consequence of cuts by their colleagues at Westminster. I did that show, but Mr Fraser did not give way to me twice. I shall give way to him. Murdo Fraser. I am sorry, Mr McKee. I took four interventions in the course of my opening remarks and there is only so much joy that you can have in the course of a short debate. The point that I was going to make to Mr McKee was simply this. When SNP members in the past and more recently have called for cuts in co-operation tax, cuts in air departure tax, cuts in VAT on tourism, cuts in VAT on building repairs, did they spell out how those cuts would be paid for? Ivan McKee. If Mr Fraser is well aware, co-operation tax was a proposal for after independence and clearly after independence when we have full control of all the levers, then it is a very, very different position. At the moment, we do not even have co-operation tax. So if Mr Fraser would be happy to join with us in asking for co-operation tax to be devolved, then we could have a discussion about what that co-operation tax level should be. So where is all this extra money supposed to come from with Tories and asking for? When pressed on this, we heard today about the vast sums that will be saved from not rolling out the baby box, less than £8 million to fund spending and tax changes worth more than 100 times that, new calculator needed on the Tory benches, I think. When pressed further delayed discharge in NHS agency staff are mentioned, despite delayed discharge down 10 per cent in Scotland compared to a year ago, and both of those spend items in Scotland below what they are in Tory-controlled English health service, if that was the source of the magic money tree, then why hasn't it been done where the Tories are already in control? Even if none of that were true, sure. James Kelly. I thank Mr McKee for giving way. Mr McKee represents Glasgow Provin, where some of the wards run very, very high levels of child poverty, which would be a concern to all of us, including Mr McKee. What does he think the budget has done to address those child poverty levels? Ivan McKee. As Mr Kelly is well aware, we have taken steps to reduce the tax that the lowest income earners are paying in Scotland. We have also taken steps to remove the pay card so that public sector workers are getting pay increases that they deserve. What we are not doing is making up monopoly money, like Mr Kelly and his party are, to fund things that do not exist. That is the difference between us and then we are credible, we can deliver. They just talk about monopoly money and talk about ignoring the economic reality as expressed by the SFC. Even if none of that were true, the Tory party's plans were still not stacked up. None of that extra money would be available to fund their tax or spend plans in the coming year. The reality is that that is indeed economic illiteracy from the Scottish Tories. It does their credibility no good. If they want to be treated as a credible opposition in this place, they have to do better. In conclusion, this Government's tax plans are credible, costed and serve well the people and the economy of Scotland. That is why this Parliament should support the Scottish Government's tax plans. Thank you very much, Ms McKee. For a call bill bowman, my members, there is time for interventions. A call bill bowman to be followed by Stuart McMillan. Mr Bowman, please. Thank you, Deputy Presiding Officer. Just to reassure Mr McKee, I do not think that I mentioned Jam once in my speech. I have a quick look. Today, the SNP seeks this Parliament's approval of their plan to increase taxes on Scottish workers. In effect, they seek approval for something else also. Their decision to break the manifesto promise to the people of Scotland not to increase taxes. That was the assurance that the SNP gave Scots when they wanted their votes. Nicola Sturgeon boldly announced that she had been very clear that the Government will not increase income tax. We support that approach and almost two thirds of Scots voted for parties who promised not to raise taxes. During the debate last year, Derek Mackay stood in the chamber and proudly declared that he was determined to stay true to the SNP's income tax proposals. One year on, the only thing that Mr Mackay has stayed true to is his willingness to use the ever-eager greens to push through his budget. So eager, in fact, that Mr Harvey seems to have forgotten to require any of his party's own income tax policies to be adopted. With a straight face, Mr Mackay presented the deal as a tough negotiation going down to the wire later. Given the ideological gulf between the two parties, we can imagine negotiations only having dragged on literally for minutes. However, there is a serious point to be made. Mr Mackay has chosen to increase taxes for almost half of all taxpayers. More than half a million Scottish workers earning over £26,000, nurses, teachers, social workers, police officers, paramedics and many more ordinary hardworking people. Is this the SNP's idea of the wealthiest in society? They are saying that they are helping the lowest paid. With no sign of embarrassment, Mr Mackay announced a tax cut of up to £20 a year for some. I invite Mr Mackay to visit Dundee's more deprived areas to explain to the hard-pressed families how his tax cut, which would not cover the cost of his return train fare, will help them out of poverty. Families across Scotland need real help, not gesture politics. Since 2010, the Conservative UK Government has cut taxes for Scots on the basic rate by over £1,000. At the weekend, we saw how the chancellor will step in to save married Scots from losing their tax allowance, which was put at real threat thanks to the SNP budget. That is the sort of action that genuinely helps people and the SNP would be wise to follow the Conservative example. Those ill-conceived and unnecessary tax rises will affect the wider economy, too, which is already suffering after a decade of SNP mismanagement and incompetence. We have sluggish growth, just a third of the overall OECD rate. We have the highest business rates in Europe, with our confidence as among the lowest in Europe. John Mason. I thank the member for giving way. Would he accept that Westminster might have a little bit of influence on the Scottish economy? Mr Bowman. Are we growing at the less than half the UK rate, then? Problems, to go back to my speech, at firms across my own area of Dundee in the wider north-east only know too well thanks to the SNP. Our productivity sees painfully slow increases. Despite that shambolic record, Mr Mackay, ably assisted by Mr Harvey, is about to pour petrol on the fire with yet another round of tax hikes. Now, it would be easy for me to stand here and reel off a list of respected bodies who have warned against the SNP's damaging tax plans, so I shall. The Federation of Small Businesses, the Scottish Chamber of Commerce, Scottish Engineering, the Scottish Retail Consortium and CBI Scotland, all warning about the negative impact of tax increases. Former CBI Scotland director Ian McMillan sums it up with a simple message. Widening the tax gap with the rest of the UK is likely to cause great damage to the Scottish economy. The worst part of all this, though, is that it is being done willingly, inflicting economic hardship on Scottish workers and risking the Scottish economy as a political choice taken by Derek Mackay and Patrick Harvey. We know that the Scottish budget is going up thanks to the UK Government. Mr Mackay has said so himself. Yet he persists with a budget that takes from hard-working Scots, cuts council budgets to the bone and ignores the advice of Scotland's leading economic bodies. Whilst the SNP and the Greens might be content to view hard-working Scots as a cash cow, on those benches we stand up for hard-pressed families, we stand up for businesses, we stand up for people getting on and aspiring to do better in life. Patrick Harvey. I'm grateful. Perhaps the member, unlike any of his colleagues so far, will say where in the Scottish budget the extra £500 million will come from to fulfil the Conservative tax policies. We're debating an income tax rate resolution here. If he wants to cut taxes for the wealthiest colleagues in the UK, where will that come from within the Scottish budget? Bill Bowman. I think he perhaps weren't listening to Murdo Fraser in his speech where I think said that. Well, I'm sure he will happily send you a video clip to watch again and perhaps take more care and you're listening. The SNP have already lost the trust of Scottish business now. Thanks to their broken promise on tax, they are about to lose the trust of the Scottish people as well. Last year, Mr Mackay was steadfast at suggestions to increase rates or changes in bans where an experiment with every tax leaver in an almost careless and reckless fashion. Those extreme positions do not serve the Scottish taxpayer well, he maintained. That is what he now proposes. In Mr Mackay's own words, this budget is a careless and reckless experiment at the expense of the Scottish people and, for once, I agree with Mr Mackay's economic assessment. Thank you. I call Stuart McMillan to fall by Elaine Smith. Mr McMillan, please. Thank you very much, Presiding Officer. In his earlier contribution, Murdo Fraser spoke of the generosity of his UK Tory Government colleagues and Bill Bowman, just if you want to go and spoke about the economic hardship. However, I suggest to both Murdo Fraser and to Bill Bowman that I suggest that they actually talk to the people who used some of the 76,764 packages of emergency food taken between April and September of last year. That figure is expected to more than over 150,000 food packages for this year. Here is the generosity of the public, not a Tory Government, slashing welfare payments, managing a cruel system, actually forcing some people back into work, people who actually cannot go back into work. I am sorry, Mr Fraser and Mr Bowman, that your party, down in London, is having an adverse effect on tens of thousands of people, not just in Scotland but across the rest of the UK. When it comes to talking about £500 million worth of tax policies to aid the richest and wealthiest, as compared to the poorest and those who require that money, I think that it is the Conservative party that needs to help. I apologise to the population of Scotland and beg for their forgiveness. If you are going to beg for forgiveness, I will take your intervention. I suspect Mr MacMillan no. You can try. It is a year. What I believe, Mr Fraser, is that the majority of the population of Scotland want to have a fairer and more progressive system. To ensure that those who are less well off can have a better quality and standard of living. I am sure that Mr Fraser, if he wants to come to Inverclyde and talk to many of my constituents, will tell them exactly that they want to have that type of system. It has been said many times, but it is worth reiterating that the setting of the project is taking place against the backdrop of that tough economic and public expenditure conditions due to Mr Fraser's Conservative colleagues down in Westminster. It is also important to remember that the Scottish Government did not take the decision to alter income tax rates in Scotland lightly. However, following the publication and findings of the discussion paper examining the role of income tax in Scotland, it is clearly the right decision to ensure that we protect our public services and also grow our economy. Let's assess the Tory cuts to Scotland that the people seem to be keen to forget. Between 2010-11 and 2019-20, Scotland's discretionary budget allocation has decreased by 8 per cent. There are £2.6 billion in real terms. For 2018-19 alone, the fiscal resource budget allocation is to be £221 million lower in real terms than the previous financial year. Over the next two years, our block grant from the UK Government for day-to-day spending is projected to fall by £500 million, yet Mr Fraser and Ruth Davidson's party seem to think that Scotland does more than enough funds to increase public spending but keeps tax rates at the same or even decreases them for some. The Tories are dragging Scotland out of the EU, which will have a hugely negative impact on Scotland's productivity, trade and immigration, which is thought to mean a loss of around £12.7 billion a year for the Scottish economy. That flies in the face of the recent report that is named Scotland as the third-best-largest European region for foreign direct investment. It also highlights in its findings that Brexit remains a clear threat to Scotland's investment potential. David Davis is trying to reassure people that, in his comments today, the UK will not be plunged into a Mad Max-style world borrowed from dystopian fiction. He emphasises just how clueless the Tories are in Brexit and the result that they are trying to discredit journey concerns about how the UK will operate once we have left the EU. The Scottish Government did specify, however, that the proposals on income tax needed to meet four key tests. They must maintain and promote public services in the face of the UK spending cuts, protect incomes of low earners, make income tax more progressive and contribute to tackling inequality and also support economic growth. In doing so, the changes to the tax system will increase revenues for growing Scotland's economy and also transform public services. Ultimately, those tax proposals protect those on the lowest incomes, making the system fairer and also more progressive. For the majority of taxpayers, Scotland will be the lowest-taxed part of the UK, with 55 per cent of Scottish income taxpayers paying less than the people earning the same amount and living elsewhere in the UK in 2018-19 under those new proposals. More than two thirds of tax-paying Scots will be paying less income tax next year as a result of those changes to emphasising the SNP's Scottish Government's commitment to safeguarding low earners' pay packets. In Inverclyde, data based on the annual survey of hours and earnings indicates that almost 80 per cent of Inverclyde residents will be paying less income tax in 2018-19 as compared with the current financial year. Nearly 80 per cent of Inverclyde residents will be paying less income tax in 2018-19. I can take one more. Michelle Ballantyne. What do you say to one of your supporters, somebody who voted independence, who has been a supporter of the SNP all along, who has written to myself and one of your members to say that he is frustrated beyond belief because he has worked really hard, he grew up in a deprived area, both he and his wife grew up in poverty, they've worked really hard, they now have good jobs, they've been able to buy a nice house in a nice area, they have one child and they are now struggling and they've just heard that you're going to put up their taxes, you've put up their council tax through your higher rate tax. It is an intervention please, not a long speech. They are now struggling because they want to have a second child and now feel that they can't afford it. What is their message to them? My message is please make interventions, interventions and not intermediate speeches. Mr McMillan. I say to Michelle Ballantyne that the deal that is actually on the table for Scotland is the best deal in the UK. I have many constituents who have contacted me who are very much supportive of this and some of them are not SNP voters. So this is the best deal for Scotland and it's the best deal in the UK. I'm now conscious of time. No, no, you make up your time. Thank you very much. That's great. Jackie Baillie is delighted with your comments there. Certainly some in the chamber will say that certainly in terms of the aspect of the taxation. Some in the chamber will say that that's all well and good but the top rate of tax must be increased further. But I believe that the Scottish Government's top rates tax proposals will generate the most income with the least risk of losing revenues next year and also damaging the economy. And certainly just on that particular point, my colleague Bruce Crawford actually asked James Kelly the question about the tourism tax that he was talking about earlier on. He couldn't answer. So if he doesn't know how much additional money is going to come in with a tourism tax, then what's the situation going to be regarding his top-line tax? On that point, Presiding Officer, I know you are now signalling. You are concluding. Thank you. I call Lee Smith to be followed by John Mason. Miss Smith, please. Thank you, Presiding Officer. So here we are one year on from Dennett MacI's historic day when the Scottish Parliament was able to use its new tax powers to set all rates and bans for income tax in Scotland. His powers were demanded by the SNP to do things differently in Scotland or to borrow a phrase from our First Minister, Donald Dewar, to deliver Scottish solutions for Scottish problems. But unlike the timid approach of the SNP, Scottish Labour believes that those new tax powers should be used to their full extent to create a fairer, more prosperous society to redistribute both power and wealth from the haves to the have-nots. If society is to be just, we must all contribute according to our ability and each receive according to our need. But even those on the SNP benches who are sceptical of this socialist approach to taxation would surely agree with what Donald Dewar said about tax powers on 31 July 1997 in the House of Commons during the White Paper debate on Scotland's Parliament. He said that it is important to recognise that the power may be used to deal with some special project or difficulty. Scottish Labour have laid out clearly in our budget proposal how the Scottish Government's tax powers could be used to fund the £5 child benefit top-up policy. John Mason. I thank the member for giving way. Would she accept that there is a risk of some behavioural change and people avoiding tax if the difference between England and Scotland is too great? I thank the member for that intervention because it is something that I am going to cover extensively soon because I actually think that we in this Parliament have a duty to lead the way on behavioural change as well, but I am going to come to that. However, back to my point that I was making, research that the Scottish Government is well aware of yet refuses to act upon shows that topping up child benefit by £5 per week would lift 30,000 children out of poverty. If the Scottish Government used its powers over taxation progressively, it could comfortably cover the cost of topping up the child benefit estimated at £256 million. Surely, with 260,000 Scottish children living in poverty, the powers of the Scottish Parliament should be used to address that urgently. Would Elaine Smith not be concerned that the research that I have seen suggests that only £3 out of every 10 would reach those children's greatest need? I thank the member and I also anticipated that, which I will be addressing in just a moment. However, if I can finish this point, not only would topping up child benefit mean fewer children would go hungry or cold or suffer social exclusion or be stigmatised for being poor, but in principle this would show that Scotland is prepared to meet its moral obligations. It is the ability to tackle issues such as child poverty and all the unfair manifestations of it that a child is likely to bear throughout their life that, I believe, forms a fundamental justification of this very Parliament. We have heard it argued from the SNP that tax avoidance is a perfectly rational response to tax increases. Of course, that is usually a Tory argument. However, debate around tax and behavioural change is far from settled and there is growing evidence that, when it comes to tax, people often do not act out of self-interest alone. There are ways that behavioural changes such as tax avoidance can be offset. Sadly, the Scottish Government seems to assume that tax avoidance is inevitable and that is an assumption that I think only serves to legitimise that behaviour. However, the British Psychological Society of highlighted research that suggests tax attitudes improve when the link to public expenditure is made. I suggest that it is our job in this Parliament to make that connection and to persuade people that taxes are being used wisely to better our society for all of us to benefit the so-called social contract that the SNP used to believe in. The goal of lifting 30,000 children out of poverty is surely one that can speak to the hearts of the people of Scotland and therefore motivate every single one to pay their fair share. Now, I anticipated that the response to that has hinted in a reply to my question in the chamber recently. It might be the one that the cabinet secretary was coming to there. They might suggest that, since child benefit is a universal benefit, it is not one that will capture the hearts of the richest Scottish people. Before I address the reason why child benefit top-up is in fact a policy that people can get behind, I would like to address something of a hypocrisy in that position. The SNP attacked the topping up of a universal benefit, yet they seem to have been long committed to universal policies. We hear SNP speakers trotting out Scottish universal benefits for a claim such as the baby box, free higher education, free personal care, free school meals for younger children and, as a socialist, I support universality. However, its wider acceptability is dependent on an understanding of progressive taxation. If they are better off benefit, they can, of course, pay back through fair progressive taxation. However, the main point here is the justification of the universal child benefit policy. I come to the point that Derek Mackay mentioned, that only £3 and every £10 spent on child benefit top-up would go to households in poverty. Although I believe that that would be money well spent on poorer children, it is vital to keep in mind that our job in this Parliament is not just to lift children out of poverty but to prevent children from being pulled into poverty. An additional £5 per week per child for households on a financial cliff edge at risk of being pulled into poverty would help to stop the rising child poverty levels. Given that the IFS forecasts that a further 100,000 children in Scotland will be living in poverty by 2020, we must act now to prevent this shocking forecast becoming a reality. I believe that most decent-minded people would feel that this is a cause that their taxes could support. In conclusion, I did not say collection to this Parliament to tinker at the edges and neither did any of my Scottish Labour comrades. We are here to fight against the scandal of Scottish poverty and the inequality that underpins it. We are here carrying on the legacy of James Keir Hadge, who said and for men, Presiding Officer, to read women too, the democratic Labour Party of the future, composed of men in the earnest men who will go to Parliament, not to ate the manners of the classes but to bring relief to the suffering masses. We are here for the many, not the few, and we will not support these timid tax rates today. As has been said, we do seem to discuss this topic of Scottish income tax quite a lot, but clearly what Scotland is doing with income tax is extremely important. Today I would like to state that I think that the Government approaches the correct one, and we need to challenge some of the myths that we are hearing this afternoon and previously from both the Conservative and Labour. I would like to go through some of those myths. Number one myth comes from the Conservatives, which is something like, we can cut taxes but still have more money to spend on services. Well, no, we can't. As a general rule, if we want to protect services, let alone improve them, the money has to come from somewhere, and that means either we cut expenditure somewhere else, we borrow or we raise taxation. There seems to be a suggestion from the Conservatives that lots of money is being wasted and that can be used to pay for services. Firstly, they should tell us where that wastage is, and presumably they would cut that department's budget. The reality is that we all waste money from time to time. We buy food that we do not use or music that we do not listen to or pay for a holiday, someone is sick and we cannot use it. That is life and cannot be wholly prevented, so if the Conservatives are trying to tell us that there would be no money wasted under a Conservative Government, I think that they will find that most people will laugh at them. Of course, there are issues such as big IT projects where money has been wasted, and the reality is that most big organisations have had bad experiences with IT both in the public and in the private sectors. The public sector is more transparent so we hear more about it, but we know that the private sector has problems with IT as well. I think that that is something that we just have to live with. The second Conservative myth is around the economy, and it comes in three parts. On the issue of IT projects, I declare an interest that I am a partner in a farm. We spend £178 million on a computer that does not work, and we are spending more per year on running that computer than it would cost to buy a new computer system. Does the member think that that is good value for money? My point is that every Government, including Conservative Governments, and virtually every big business—and I have seen it where I have had interactions with big companies—have got into problems with IT. That is just something that is not going to be avoided whoever is in power. That is the point that I am trying to make. The second Conservative myth, as I said, is around the economy. Growing the economy is the be-all and end-all. It does not matter how the benefits of growth are shared out and that higher taxation inevitably damages economic growth. The problem is that we have seen relatively low taxation, certainly a lot lower than when I was younger in recent years, but growth recently has not been that great. Let us remember, too, that the economy is mainly influenced by Westminster, not by the Scottish Parliament or the Scottish Government. What growth there has been has not benefited everyone. If we do nothing to intervene, growing the economy is likely to only benefit those at the very top, perhaps the top 10 per cent or the top 1 per cent of people. The two issues are largely distinct. How do we grow the economy more and how do we use taxation to more fairly share the income and the wealth of our society? It is probably also a good time to point out a related Tory myth that higher taxation will drive away individuals and businesses. No, I do not accept that this is the case. Individuals and businesses are looking for a number of things, including an educated workforce, good schools for their kids, health services, roads and other infrastructure, but those things only come about through taxation. To take an extreme example, if there was no taxation at all and no schools at all, I do not think that we would see many individuals or many businesses coming to Scotland. The fourth myth, again from the Conservatives, is that it would be a disaster if Scotland was different from England in any individual way. The whole point of devolution was to allow different parts of the UK to do things differently in the way that suited them best. The Conservatives may prefer a more centralist or totalitarian approach, the type of regime where London decides what is best for it, and Scotland, Northern Ireland, Wales and everywhere else has to fall into line. However, it is clear that our economy, our needs, our geography and many other factors are very different from the south-east of England. Therefore, I would suggest to the Conservatives that they should be less fixated with centralisation and everything everywhere being exactly the same. A bit of diversity can be a very good thing. To turn to Labour, the Labour-men myth seems to be that you can raise taxes as much as you like and take no account of the comparable rates in England and be certain that there will be no behavioural change and therefore no lost revenues. In answer to that, we can be fairly sure that if we jump to a 5p or a greater difference in the tax rates at a given income between Scotland and England, there is a high risk of people incorporating, moving some of their income elsewhere and otherwise avoiding tax. However, the reality is that we do not know how people will react. We can study the Swiss cantons all we like with their different tax rates in a small geographical area, but there is no certainty that people in Scotland will react in exactly the same way as people in Switzerland. Of course, public sector workers will be required to stay in this country because of their jobs and some high-paid people will feel a moral duty, as Elaine Smith suggested, to pay the extra tax, but we can be fairly sure that some people will only look to their personal advantage and will do all that they can to avoid paying the tax that they are meant to be paying. I accept that the Jeremy Corbyn and Richard Leonard style of politics is to put the emphasis on presentation rather than content, and that has proved popular to some extent. However, when we are responsible for countries finances, there is a need to be more realistic and to match income and expenditure. Overall, I consider that Derek Mackay's income tax proposals should be supported, they increase tax fairly gently and we will see how that works. I am asking Mr Mason, could you wind up right now, please? That was terribly effective. My goodness, at last I am being obeyed. I call Alison Harris to be followed by Emma Harper, please. Thank you, Deputy Presiding Officer. With the proposals before us today, the SNP, aided by the Greens, are raising taxes on more than a million Scots. The highest income tax rise for 40 years and, shamefully, breaking promise after promise from the First Minister and the SNP to the people of Scotland in the process. What did the 2016 SNP manifesto say on the subject of rates of income tax? Well, it said that, and I quote, we will freeze the basic rate of income tax throughout the next Parliament to protect those on low and middle incomes. How hollow those words must now sound to the nurse, the teacher, the social worker or the police officer who will be paying more as a direct consequence? Emma Harper, thank you for taking that intervention. I just keep finding that the Tories keep talking about nurses, nurses, nurses. Nurses do not make the money that they are saying is going to pay more taxes, they do not. So I would like to ask Alison Harris to please clarify what nurses are he talking about that are going to be in the higher band of taxation. Alison Harris, thank you for that intervention. I am referring to nurses who are earning £30,000 in our NHS, and nurses do earn that. The social worker or the police officer who will be paying more as a direct consequence of the latest broken SNP promise. Not content with making promises on tax rates in the manifesto, the First Minister said in this chamber on 2 February 2016, I have been very clear that the Government will not increase income tax. In the Guardian on 28 April 2016, she has quoted as saying that the Scottish National Party has set out its approach to taxation which would not be to increase the basic rate of income tax or to increase the additional rate of income tax. More recently, we have heard from the Finance Secretary, Derek Mackay, on 21 February last year when he declared that it would not be right to increase the basic or higher rates of tax for the year 2017-18 or over the course of this parliamentary session. 53 times during 2016 and 2017 SNP ministers gave that assurance that the basic rate of tax would not be raised. 53 promises broken. The SNP proposals to break those promises fly in the face of their own analysis, which showed that raising tax can decrease revenue. A fact that prompted the First Minister to declare on the idea of raising top-up taxes at FMQs on 23 March 2016, to do it in the face of analysis that says that right now it could actually reduce the amount of money that we have to invest in our national health service and our public services would not be radical. It would be daring. It would be daft. Is it not daft to raise taxes on those middle-income, hard-working families that will be hit by those proposals? By taking money out of consumers' pockets, this further risks increasing the damage that the SNP has already done to economic growth. To continue, the various voices of Scottish business have made their views very clear on the effect of increasing taxes. The Federation of Small Businesses found the overwhelming majority of their members are against tax increases. The Scottish Chambers of Commerce said that a competitive Scotland cannot afford to be associated with higher taxes than elsewhere in the UK. The Scottish Retail Consortium said that income tax rises should be not firmly on the head as it could cast a pall over consumer spending, a mainstream of Scotland's economy. A consensus of opinion telling the Scottish Government that economic stimulus and growth is the way to provide funds for the vital public services that we all wish to see, not depressing it by increasing the tax burden for hard-working families. Less money in people's pockets will clearly come at a price of jobs and growth. Does the Government really believe that it is the right when all these business organisations, including business for Scotland, have expressed such concern? An economy that, thanks to the SNP, is growing at barely a third of the rest of the UK, with missed targets not only on growth but failing to boost productivity to the UK levels? SNP policies have meant that Scotland has had fewer new business startups and lower investment than the rest of the UK, but at this stage I want to pay credit to and highlight the importance to Scotland's economy of the small business sector. Almost 70 per cent of the country's 350,000 private sector businesses have no employees, often are unincorporated and thus paying personal taxes. Many of those kind of people work long and hard to develop their businesses, some to the extent that others can actually become employed. Many of those businesses are in sectors vital to rural Scotland, from agriculture to tourism. Many are already struggling. The last thing that small business needs is to see the added burden of an increase in personal taxation. What a disincentive to work for long hours to provide the often vital local service to create the wealth that generates further employment. It was no surprise that in a small business survey carried out on behalf of the Scottish Government last year that the top three obstacles given by the SMEs to the success of a business were competition in the market, red tape and regulation and taxation. Growing the economy is the key to economic success, and keeping taxes low is a major component in achieving that growth. Whether it is for the hardworking families or small businesses, I am proud that my party will always be the party that speaks out against the undue and damaging tax rises that every other party in this chamber has called for this afternoon. There has rightly been significant debate over how this Parliament uses our income tax powers, but I believe that at the heart of the Scottish Government's proposals lie the best interests of low and middle income earners. In the tax discussion paper, The Role of Income Tax in Scotland's Budget, the Cabinet Secretary proposed four key tests stating that tax changes must mitigate UK Government spending cuts, make the tax system more progressive, protect lower earners and support economic growth. As the member of the Finance and Constitution Committee, I am assured that, in setting out those tests, avoiding any risk of adversely impacting Scotland's economy has been at the forefront of the cabinet secretary's mind. Of course, I am aware of the predictions of doom and gloom voiced mainly by the Conservative party members surrounding attempts to implement a fairer tax system and was pleased to hear recently from the international monetary fund that progressive taxation does not necessarily affect economic growth. In meeting those four tests set out above, we have, before us today, it is a sensible tax policy balanced to meet the needs of business while raising more for public expenditure and protecting lower earners. Those plans have taken us from a real terms decline in that resource expenditure into real terms growth. We have a commitment that the Scottish health service spending will increase by £2 billion by the end of this Parliament to support rising demand as our population ages and an increasing share of the front line NHS budget will be dedicated to mental health as well as to primary community and social care. The Scottish Government has also rightly chosen to continue mitigating the UK Government's cuts to social security spending to limit the number of people being pushed into poverty. If backed by MSPs, the Scottish Government's proposed changes to income tax will inject £428 million over the course of the next year to protect free prescriptions, free personal care and free tuition. It will increase the health budget as well by £400 million and provide above inflation investment in the police in universities, colleges and local government services. The reality of the UK Government's determination to continue with austerity and the very real risk of cliff edge exit from the EU is that our economy and public services are at risk. By 2020, the Scottish budget will have faced a decade of cuts, a £2.9 billion cut in real terms since 2010, coupled with the cuts in the capital budget. There is no time for discussion around who is going to not benefit in this. For me, I would like to dispel the myth that this is an issue of nurses and salary. For me, if you have a community ward with 40 nurses on a rota, 90 per cent or 92 per cent of them will pay less of the same tax. That is a budget that supports our working nurses. It means that, while the Westminster Government determinedly marches down one road, seemingly blind to the chaos surrounding it, we must decisively choose another road. Quite simply, asking those to earn more to contribute a wee bit more is fair and necessary. The introduction of the starter rate of 19 per cent will protect lower income earners. It is not a massive reduction but a structural change and therefore a step in the right direction. In the first three tax bans at present, many employees are women, 89 per cent of nurses are women, most healthcare support workers are women and most people providing care in the community are women. The move to a five-band income tax system is welcome from an equality perspective because it means that no one earning less than 33,000 in Scotland will pay more tax than they do now. My sister, who is one of those nurse consultants who will be making more money, is absolutely pleased to be paying a wee bit extra. She told me that she is happy as long as it benefits the people of Scotland, benefits her health, benefits her education and benefits her future. As the committee scrutinised the draft budget, one anomaly identified was in proposals from December that would have seen those earning between £43,525 and £58,500 paying less tax rather than more. I am pleased that the cabinet secretary confirmed that that will be addressed by changing the higher rate threshold. The Scottish Government has set out a clear vision for a progressive taxation system in Scotland. As Patrick Harvie says, if we are going to promote a progressive taxation system in Scotland, it means that we can promote a civilised society in Scotland. That is one society that I am absolutely happy to support. I hope that members from across the chamber will join me in acting responsibly to secure the best outcome for Scotland's people and our economy and please support this motion. Thank you very much. I call Neil Bibby to be followed by Gillian Martin. James Kelly said earlier that Scottish Labour is clear that the tax changes proposed today fall significantly short of what is required and will not raise the revenue that Scotland needs to properly invest in our public services. We cannot and will not support the rate resolution and will be voting against it today. Members on all sides of the chamber will appreciate the importance of the link between the decision that the Parliament takes today on the Scottish rate resolution and the budget itself. The standing orders will not allow us to agree stage 3 of the budget bill until a rate resolution motion has been accepted. However, the connection between the two major items of business on the parliamentary agenda this week is more than just procedural, it is also political. We cannot decide a budget until we decide on tax rates and of course with new powers to decide on tax rates comes new discretion over spending. The choices that we make this week will therefore say a great deal about our priorities and about how much we are prepared to ask those who can afford it to contribute to those priorities. For Labour, the choices made by the Scottish Government and the Greens are simply not good enough. They are tinkering at the edges when the country needs real leadership, real change and an end to austerity. Last year, COSLA told us that because of inflation costs and rising demand for services, which are increasing every year, that local government in Scotland needed £545 million more out of this budget just to stand still. As we have heard, public sector workers have also faced years of pay restraint and this budget does not deliver a fully funded pay settlement. As COSLA's resources spokesperson has recently said, quite simply with no money in the budget settlement from the Scottish Government for pay, any pay rises for council workers can only come from cuts to services or council tax rises. The cabinet secretary will know that only last week Audit Scotland said that there were significant risks around under-resourcing of the early years and childcare expansion. Of course, there was a time when the SNP promised not just to protect public services but to end Tory austerity. Whatever test Derek Mackay may set himself, I can tell him today that his budget and his tax policies that he is putting forward this week neither address the chronic underfunding of local services or on-going austerity. Let us not forget that the revised settlement for local government in the coming year owes more to the use of government underspends and reserves than it does to progressive taxation. The cabinet secretary and MSPs across the chamber will know that cash from reserves can only be spent once, that money will not be here again for the following year's budget. After accounting for changes to business rates, the cabinet secretary's proposals will only raise a net figure of £83 million for public services—yes, just £83 million net figure—out of a budget of over £30 billion. That is significantly short of the £960 million that Scottish Labour believes are required. That is why the Scottish Government needs to come forward with a sustainable position on tax that they have failed to do. I haven't got time just now for me to be later. Throughout the budget process, Scottish Labour has affirmed and reaffirmed our belief in progressive income taxation, a case that, unlike the SNP, we made before the 2016 election. As has been said, we believe that the richest in society should pay their fair share, so we would ask them to pay more than they do at present. It is not just a matter of raising revenue for our public services, although we are confident that it will. It is a matter of principle, too. As we have heard in the chamber before, the top 1 per cent of earners in Scotland own more than the entire bottom 50 per cent put together. The SNP's proposals have only put a penny on the top rate. Our proposals not only introduce a 50p top rate of tax but lower the threshold for the top rate to £100,000. That would expand the number of top tax rate payers incorporating more of the highly paid across private sector and the public sector, including directors, chief executives and, yes, Scottish Government cabinet secretaries, too. I doubt they will move their tax affairs to England. Based on data from the annual survey of hours in earnings, someone earning £150,000 would pay £142 per week more under our proposals but just £17.59 more per week with the SNP. Spice have confirmed that the genie coefficient and internationally respected measure of inequality would fall by more than under Labour's proposals than those put forward by the Scottish Government. Not only do our tax proposals raise more money for public services but our proposals do more to reduce inequality, a point that Elaine Smith made earlier. We are clear about the need to raise the top rate of tax and we are clear about why we need to do it. Comparing contrasts with the SNP Government, who said barely two years ago that any tax rise for highest earners would be reckless and daft, but we are now adding a penny to the top rate. The same SNP Government, who once supported the 50p top rate but voted against it eight times, is in its position that is simply incoherent. With more financial power than ever before, this Parliament has the chance to set fair and progressive rates of taxation. Our proposals could generate up to £1 billion extra to invest in protecting good quality, vital public services and tackling inequality and disadvantage in our society. Instead, with the support of the Greens, the SNP Government has made different choices. They are boasting about Scots paying less income tax than elsewhere in the UK. They are also almost apologetic in asking the various highest earners to accept a modest rise in their tax bills. Here today we have heard Patrick Harvie talking about the radical changes on tax while John Mason calls them gentle. We also see the SNP consistently, in this Sturgeon Derek Mackay, using Labour arguments against the Tories and Tory arguments against the Labour Party. What that results in is a budget that ends up looking both ways and achieves very little. It results in those who depend on public services having to shoulder the burden of Tory austerity. For too long, this Government has been timid when the country needs fairer taxes. What they are proposing today is not good enough. It does not meet the scale of the challenge before us and it will not reverse austerity. Things need to change. We need to support under-resourced public services. We need to undo the damage that austerity has done. Therefore, we need to be bolder when it comes to tax. I call Gillian Martin to be followed by Rachel Hamilton. If my email inbox over the last few months has anything to go by, it is clear to me that there is very little public support for an austerity agenda. Many earners want to see more money put into vital services. Research by Deloitte has shown that support for cutting public spending to restore public finances has halft since 2010. There is only one-fifth of the public now seeking a need to make cuts. More than 60 per cent of people would like to see more tax raised if it means more money going into public services. Most of the correspondence that I got had variations on the phrase I am happy to pay more if it means more money goes into our schools, our NHS, our communities. This very morning, every single caller into BBC's Call K programme said the same. They were not particularly happy that the Scottish Government has to mitigate Tory austerity, but they were happy to pay more if their tax went into Scottish public services. The presenter, speaking to Stuart Stevenson, who was representing the Tories, called him a lone voice as not one caller agreed with his comments on the budget. The fact is that most earners will not pay any more. Those who can afford to pay more will be asked to pay some more. I have more faith in those people than the murder phraser. Those people do not want apologies, they do not begrudge tax cuts to the poorest, they want better services and a progressive budget that delivers that. They look on with horror at the decimation of the NHS and other parts of the UK and firmly reject the Tory policies that caused it. They look at student debt in England and think thank goodness for no tuition fees in Scotland. They look at the sickest people in the rest of the UK paying £8 for every item and a prescription and to kind of phrase they say no thanks. They recognise the value to society of lifting people out of in-work poverty. According to the Resolition Foundation, UK Government cuts will leave the poorest third of households an average of £715 a year worse off by 2022-23. In a low earning family that is the difference between putting the heating on in winter. That is the difference between being able to feed your kids. I am happy to pay more if that happens to less and less families. I want to take a little bit of exception to the phrase hard working families. Hard working families are not just families that are the highest earners. It is the working poor who work harder than some of you ever here will ever know. For the 10 years, the SNP-led Scottish Government has already shown that it has been ambitious in the face of austerity. Despite Tory cuts, there has been record spending in both the NHS and education. The Scottish Government and the SNP have also advocated against a cuts agenda in Westminster and nonetheless, the grant from the UK Government continues to decrease. Over the next two years, our block grant from the UK Government for day-to-day spending is projected to fall by £500 million. The Conservative Party thinks that it is acceptable to take away £500 million from the Scottish people while I do not. Week after week in this place, Scottish Tory MSPs demand increased public spending while supporting this tax giveaway for high earners and big business. You are out of step. The majority of Scottish people do not subscribe to that. Between 2018 and 2019, this budget will raise £219 million to support public services, tackle poverty and stimulate Scotland's economy. Meanwhile, against the wishes of the Scottish people, our economy has been put at severe risk by the ill-thought-out, badly managed, economic vandalism of a hard Brexit. The EU's the single largest market for Scotland's international exports, worth £12.3 billion in 2015. Just last week, the Cabinet Secretary for External Affairs Fiona Hyslop held meetings in the Netherlands. More than £2 billion of Scottish exports pass through the Dutch ports annually. While the Scottish Government continues to work hard to emphasise that Scotland is open for business, the disarray and confusion in the Labour and Conservative parties in Brexit means that our economy is even more vulnerable. This is particularly important for my constituency in Aberdeenshire East and the north-east of Scotland. A price-waterhouse Cuper's report last year predicted that Aberdeen would be the hardest-hit area with a reduction in output over the next 10 years of 3.7 per cent under a hard Brexit scenario. When talking agriculture, Boris Johnson would do better to read the SRUC's report released this week, which made seriously worrying reading for Scotland's farmers. Instead of making embarrassing and ill-advised jokes about stag knights and carrots, he should be doing a little bit more listening to experts. Or have the Tory Brexiteers still had enough of experts? It certainly looks that way. Today, we vote to use the powers available to this Parliament to mitigate threats to the Scottish economy. Today, we reject Tony's austerity. Today, we ensure that the vast majority of Scots have more money in their households. Today, we ensure that public services are the best funded in the UK. I will be voting today to support a budget that makes us a progressive nation, the most progressive nation in the UK. The type of nation that the people of Scotland so clearly want. I call Rachel Hamilton to be followed by Willie Coffey. Thank you, Deputy Presiding Officer. May I draw members to my attention a register of interests in that? I am a small business owner. Alex Salmond spent a number of years trying to build the trust of businesses in Scotland. Nicola Sturgeon has now lost that trust. The Federation of Small Business says that confidence has fallen to near record lows. Today, against the wishes of local high street shops across Scotland, the SNP is going even further. The net taxes will reduce the take-home pay of more than a million Scots. By taking more tax from Scottish people than she promised in her 2016 manifesto, Nicola Sturgeon is reducing the amount of money that people have to spend at small businesses in our communities. The Scottish Retail Consortium has warned that net taxes will hurt high street shops. A Federation of Small Business Survey found that eight out of ten businesses did not want to see a tax rise. Even Business for Scotland has said that tax rises would not be a positive move. Scottish businesses are bearing the brunt of an SNP economy in the doldrums. Only yesterday, OECD statistics found that the SNP is growing the economy at a third of the rate of the OECD. A third of the rate of the EU and less than half the rate of the UK. In the last quarter, the only country in Europe that experienced slower growth was Norway. The SNP-run economy is projected to have the lowest growth of any major economy in each of the next three years. I will take an intervention from Derek Mackay. Hamilton believes that the UK Government has any responsibility whatsoever over macroeconomic policy in Scotland. Rachael Hamilton. I would have thought that it was Derek Mackay's responsibility to make sure that Scotland is a competitive and attractive place to do business, and that is the job of the Scottish Government. Nicola Sturgeon is failing to meet two GDP targets that the SNP themselves set way back in 2007 when they published their first economic strategy. The SNP must enable Scottish businesses to compete with the rest of the UK if our economy is to succeed. Many interventions today have touched on how we can help grow the economy, and the Scottish Conservatives have repeatedly called for the large business supplement to be brought into line with the rest of the UK. If I may, I would like to touch on that briefly. The large business supplement is a deliberately misleading name dreamt up by the SNP. In reality, this is a small family-owned local business tax, small family-owned businesses that generate wealth and employment for our local communities. The SNP's own Barclay rates review recommended scrapping their headline policy of doubling the large business supplement. The Barclay review recommend that the SNP should match the English rate. Currently, the SNP's rate is double the rate of in England, 2.6 compared to 1.3 pence in the pound. Derek Mackay's predecessor John Swinney understood well the importance of Scotland's business rates being no higher than the rest of the UK. The massive disparity in the large business supplement north and south of the border put Scottish businesses at a clear disadvantage. In 2016, CBI Scotland, amongst others, the Chamber of Commerce, the Scottish Retail Consortium and the Scottish Food and Drink Federation all called for the Cabinet Secretary to reverse the decision to double the rate of the large business supplement. Prior to the 18-19 budget, another letter dropped into Derek Mackay's entry from the British Hospitality Association. The Scottish Licence Trade Association and the Scottish Tourism Alliance asked the Cabinet Secretary to consider ending the large business supplement, which they describe as a hotel tax, causing considerable concern to hospitality licence in tourism venues across Scotland. Bear with me, because I will get back to how that is having an impact. Recently, more than 35 independent hotels wrote to me to call for LBS to be cut. Those include small businesses in my constituency, the Driver Hotel, the Crosskeys Hotel in Kelso and further afield. Its misleading name hides the fact that LBS represents a tax on many family-owned local companies. Mr Mackay, why not allow businesses to flourish by cutting punitive taxes and giving people across Scotland more money to spend at local shops on their high streets? The Scottish Conservatives ask that you listen to the industry lower LBS and focus on growing the economy. Now is the time to support Scotland's flourishing tourism sector and put an end to your net taxes and punitive hotel taxes. The Scottish Government's record on the economy is woeful and it will only get worse if you fail to support Scottish businesses. The business community is being unnecessarily picked on by the Cabinet Secretary. There voices yet another addition to the growing consensus that SNP must focus on growing the economy, not taxing people and businesses. By breaking their manifesto, promise and hiking tax, Nicola Sturgeon and the SNP are creating the impression that Scotland is closed for business. The net taxes will drive skilled workers and young graduates from Scotland and reduce the amount of money that we can spend on schools and hospitals in the future. The net taxes will reduce the take-home pay of low earners and struggling families. In turn, the net taxes will mean that people have less money to spend at their local businesses, further damaging, struggling high street shops and small companies across Scotland. Are you concerned and snigger as much as you like, Mr Mackay, but this is a serious problem with not growing the economy and it is not being taken seriously by the SNP? Derek Mackay. Would Rachael Hamilton say that the Scottish Fiscal Commission is totally wrong in saying that revenues coming from our income tax policies will increase rather than decrease then? Rachael Hamilton. Does Derek Mackay disagree with every single business organisation in Scotland that is warning against increasing income taxes, which will ensure that the economy is in the doldrums and there will not be enough money for people to put in their pockets to spend on the high streets? No, thank you. As I said, we should be doing everything that we can to support businesses. Instead, the SNP is insisting on making business people's lives harder by forcing net taxes on more than 1 million Scots. I call Willie Coffey to be followed by Kate Forbes. The Tory group has been mentioned in the SNP manifesto at length today, but I do not recall reading in the Tory manifesto their commitment to give the DUP £1 billion of taxpayer money. Speaking at this point in the debate, one of the later speakers, most of what he had hoped to say has probably been said already. One of the time-honoured traditions in here is that good information, facts and figures are always worth repeating, and I hope to be able to live up to that tradition in my contribution. Listening to the debate so far, it sounds like a classic going too far or not going far enough debate from colleagues in the other parties. So finding the correct balance was always going to be difficult, demanding some nifty footwork by the Cabinet Secretary, but I believe he's managed to do that and Scottish people seem to agree with him. When asked the question by you gov whether people supported the proposal that people earning over £26,000 should pay a little more than their counterparts in other nations in the UK and those earning less should pay less, there was a majority of two to one in support of such a proposal. With the new starter rate of 19 per cent combined with the increase in the personal allowance, it means that seven out of ten taxpayers will actually pay less than they do this year on current incomes. Over half, 55 per cent of Scottish income taxpayers will pay less income tax than people earning the same amount elsewhere, making Scotland the lowest taxed nation in the UK. The Cabinet Secretary was correct to resolve the higher-rate threshold anomaly that would have seen some higher-rate earners paying slightly less tax next year for the same earnings. Correcting that raises as an extra £55 million plus a consequential tax benefit of £7 million due to the public sector pay policy change. All in, the tax policy raises as an extra £219 million and with those other adjustments to the higher-rate threshold and the enhanced public sector pay policy change, all confirmed by the fiscal commission means that our overall use of the devolved income tax powers ensures an additional £428 million is available in Scotland beyond the block grant adjustment. That means that we can continue to support our NHS by increasing the budget yet again. We can continue to deliver free personal care, prescriptions and childcare and we can make sure that our students in Scotland do not pay any of the huge university tuition fees that we see in Wales, England and Northern Ireland. The investment in childcare to almost 30 hours a week is worth an equivalent of £4,500 every year for every child in Scotland. That is a huge commitment being made to Scotland's children by this Government and the value of that investment will far exceed the cost of it in the years to come. Last but not least, my own authority in East Ayrshire will benefit from an extra allocation of £3.6 million agreed during the budget negotiations. All of those measures are making and will make a real difference for the people of Scotland when you compare us with other countries. When we look at changing public attitudes in the recent Deloitte survey, it appears that people are pretty well fed up with continuing austerity cuts, introduced by the Tories in 2010 and supported by Labour at that time. According to the survey, only one person in five now thinks that there is a need to continue with these cuts. That is a figure that is halved in that time, as my colleague Gillian Martin told us earlier. If you look at the attitudes to extending public services by increasing taxes, that was in a downward spiral since 1997 until the crash occurred. Only 43 per cent of people supported tax rises at that point, but this has now risen steadily over the past 10 years and shows now that around 63 per cent of people want government services extended even if it means some kind of tax rise. That is one of the most significant changes in the Deloitte survey. Further bad news for the supporters of the UK Government is that, when asked if taxes should be cut, even if it meant a reduction in government services, support for tax cuts has plummeted from a relatively low 18 per cent 10 years ago to only 10 per cent now. There are some stark messages for Governments in the survey, but we can see at least that the Scottish Government in its proposals is in tune with current public attitudes. In summary my brief contribution, I believe that the tax rates and thresholds proposed in the resolution are fair, balanced and proportionate. They ask those who earn a little more to pay a little more, and they help those on lower and middle income who will pay a little less. In return, Scotland will continue to benefit from the public policies that have been put in place by this Government and which have won the support of the people of Scotland. I am happy to support the rate resolution proposals in front of us today and I look forward to the rest of this debate. The last of the open debate contributions is from Kate Forbes. Thank you, Presiding Officer. Can I start by reminding the chamber that I am the PLO to the Cabinet Secretary? While tomorrow's debate allows us to talk about the budget's £400 million additional spending on health, £120 million going directly to head teachers and lifting the public sector pay cap for public sector workers, today's debate is about how we do that. If I have learned anything from speaking to constituents and answering emails, it is this. People want to see fair investment in our public services, which everybody benefits from no matter how much they earn, and most people can do the maths. They know that to spend more, you have to raise more, but to raise it in such a way as to protect low earners, so as to reduce inequality and make it proportionate to the ability to pay, so as to maintain and promote the level of public services, and so as to support the public economy, all of which were the four tests that the Scottish Government applied to propose changes to income tax. That theory that people can do the maths is not just based on anecdotes and my conversations with constituents. It is also backed up by polling and analysis. Every year, Deloitte and the Reform Think Tank produce a report that analyses the public sector, entitled State of the State. It looks at the UK-wide performance of the public sector and public opinion. This year's report showed that 63 per cent of respondents across the UK, not just in Scotland, agreed that taxes should be increased if it meant that Government services would be extended. The figure is higher in Scotland. That is up from 46 per cent in 2009 to 63 per cent this year. In contrast, a mere 10 per cent advocated cutting taxes. Support for tax increases in order to invest in public services has grown even since last year's report. Since the Scottish Government announced its tax proposals, the Sunday Times UGov poll confirmed that 54 per cent support our tax plans with less than 20 per cent opposing them. In sharp contrast, support for the Tories' continual cuts to public spending has halved since austerity began in 2010 and people are fed up with the relentless pursuit of austerity, apparently in the name of balancing the books, but in reality the Tories have missed nearly all relevant fiscal targets since 2010. I do agree to an extent with speakers and anybody in this chamber who argues that we need to increase the tax base. One of the greatest challenges to economic growth, according to the Scottish Fiscal Commission, is decline in the 16 to 64 population. Rachel Hamilton talked about the Federation of Small Businesses. The FSB has said that the ability to hire people with the right skills and maintain trade links in the EU is, I quote, fundamental to small-firm survival and growth. We know in Scotland that it is small and medium-sized businesses that drive the economy and it is critical that they have access to a talent pool and to people who want to live and work in Scotland. We know that small businesses, whether it is in the agricultural, the hospitality or the construction sector, to name just three, are deeply nervous about recruitment and retention of workers, particularly from the EU after Brexit, but that applies beyond the EU. It is a general concern currently about recruitment beyond the UK. In fact, it is the difficulties of securing visas for skilled workers from outside the EU right now that is actively hampering the growth of some businesses. If those same rigid, incomprehensible rules are applied to EU citizens after Brexit, then businesses will not be able to grow, the economy will be stifled and minor changes to tax rates will be the least of the Tories' worries. Suggesting that our relative increase for some taxpayers would be enough to single-handedly reduce the tax pays, doesn't wash. As the head of tax for Scotland at PWC said, I quote, it is an increase but not a considerably painful one and the money will be used to bring in an extra £164 million. Lindsay Hayward, who I just quoted, like many others, has argued that it is unlikely that people will upsticks and move their operations for the sake of a penny in the pound. Behavioural change is key. I agree with the Tories on that. Targeting and efficiently spending the increased revenues from our tax plans on increased spending in our NHS, on free university education, on expanded free childcare will have a behavioural impact because it will attract people to move to Scotland at a time when population growth is key to growing the economy and the UK Government is implementing ridiculously damaging clampdowns on immigration. Taxes are paid for by hard working men and women in this country and we all have a responsibility, whatever our view on tax plans are, to use revenue raised from tax as well. Today's debate shows that we are raising taxes in a fairer, more progressive way and tomorrow's debate will show that we are investing in Scotland's infrastructure and services to create a climate for us all to prosper. We now move to the closing speeches and I call Jackie Baillie around eight minutes please Ms Baillie. Thank you very much Presiding Officer. This debate is of course largely academic because the Greens have already decided to support the SNP Government in their budget for the next financial year. So indeed the rates resolution tonight and the stage 3 budget tomorrow will pass. So you will perhaps forgive me if I don't spend a lot of time in this debate on the rates, the bans, the thresholds, others have explored that in detail in their speeches. But instead I want to look at the context in which this budget is being set because it is true that the Scottish Government's revenue budget has experienced a real terms cut of 0.8 per cent. Less of a cut than they expected may be but a cut nevertheless. The capital budget has however grown in real terms so it is a mixed bag but about £1 billion in the amount received is in the form of financial transaction money, loans that ultimately need to be repaid. Now it's interesting, I have to say, that when the UK Government announced this financial transaction money the SNP were immediately critical and I think called it funny money. Now they think it's the bee's knees. Now I am an optimist, I always hope for consistency but sadly I think that this is a triumph of hope over experience when it comes to the SNP. But let me turn to the Tories because their approach is simply to deny that the cuts have been passed on by the UK Government and pretend that the status quo is somehow fine. And of course you need to grow the economy but that doesn't simply happen overnight. You need to invest to encourage that growth and we face extraordinary pressure on public budgets that will hamper our economy from growing. Actually it's not about taxation against economic growth, it is about doing both in a balanced and sensible way. But when it comes to taxation the cabinet secretary was right, as other speakers have done, to point out that the majority of the Scottish public support paying a higher level of tax to invest in public services. But he should also be very clear. Taxpayers expect that extra money to stop the cuts and improve public services and this is precisely where the SNP proposals fall way short of that expectation. The cabinet secretary and the SNP will pay a political price for this in the future and he should be aware of that. Because the proposals before us are not bold, they're not ambitious, they fail to stop the cuts and as James Kelly rightly pointed out, the SNP's budget only raises an extra £83 million after business rate reductions. That's less than 1 per cent, in fact it's 0.002 per cent of the overall budget. You're quite simply tinkering at the edges. Let me touch on underspends. Neil Bibby was absolutely right to raise this as an issue. The SNP draft budget already built in £158 million of underspends from 2017-18. That was just the draft. Then based on the SNP's deal with the Greens you added in another £125 million, some from reserves, some from underspends. He knows I'm right. There are two points that arise from this. First, it is clear that there are significant underspends in budgets. How much will he tell us and where does it come from? Is it from housing? Is it from homelessness? Fuel poverty? Health? Which budget is it actually from? Given the increase in rough sleeping, the choice-facing pensioners who are choosing between heating and eating, and the stress on our hard-working under-resourced NHS staff, the cabinet secretary should come clean before the budget debate tomorrow. Can I also say to him, perhaps he doesn't know, because he doesn't report on this until June this year, but if he doesn't know where he's getting the money from, is he really telling us that he's simply guessing? Secondly, James Kelly described this as the Government's slush fund, and of course he's right. But like most slush funds, it's not something that's not sustainable. This is one-off money. It doesn't recur. Before we even begin consideration of the budget next year, the Government needs to find all the money committed from underspends, of which that's at least £275 million. The cabinet secretary might think that he's terribly clever with his sleight-of-hand budget, but the reality is that he is storing up problems for the country in the medium term. It is nothing but the back of an envelope accounting practice. When you think about what that might mean in practical terms, it is shameful, because the majority of this Parliament supported removing the camp on public sector pay, a camp that the SNP consistently supported in their letters to the UK Government, but I'm glad that they've changed their minds. I very much welcome the 3 per cent increase. Although it doesn't restore the loss of wages, it will undoubtedly help many public sector workers. But here's the thing, Presiding Officer. Salary rises are not one-off for one year only. A rise this year needs to be paid for next year, the year after and the year after that. The local government pay settlement is not fully funded to start with, but if it's partly funded by one year only money, then the cabinet secretary is fiscally irresponsible. COSLA just yesterday pointed out that money for pay should not be a one-off payment and must be built into core budgets or essential services will be cut as they go forward. Will the cabinet secretary give a commitment today? Will the money for the pay rise be built in for future years, not just for local government, but for health, police and fire services? I'm happy if he wants to stand up to take an intervention on that very point. I'll happily. I'm rare to miss an opportunity to be given an intervention. Can I ask Jackie Baillie specifically, does she believe that there should be any behavioural effect on their tax plans that has produced their shoddy alternative budget? Jackie Baillie. Presiding Officer, it is indeed engaging when the cabinet secretary tries to dissemble, because I asked him a straight question. I didn't get anything remotely like an answer, but let me try and deal with his point. Let me turn to the question of taxation for the wealthiest in our society and whether their automatic instinct is to avoid paying tax. I like many in this chamber believe in the need for progressive taxation. It used to be the case that the SNP and Labour were fellow travellers on this issue, at least in terms of our rhetoric. Unfortunately, the reality with the SNP is something very, very different, because in November 2014, Nicola Sturgeon told this chamber on the day that the Smith agreement was published that she would raise the top rate of income tax to 50 pence. In April 2015, when she launched the SNP manifesto, she said that the SNP would restore the 50 pence tax rate for the highest earners. I well remember her lecturing all the UK parties on a platform down in London about how to end austerity, and part of that, guess what, was a 50 pence top rate of tax. But when she has the power to do so, she runs a million miles in the opposite direction. Presiding Officer, that is simply not good enough. Local councils have a £386 million shortfall in their budget. As a result, communities across Scotland are facing cuts. Cuts to children's services when we have 260,000 children living in poverty. Cuts to mental health services when people struggle to access services now. Can I say to the cabinet secretary that it is not a good look to actually heckle at this point? Let me see to him. Cuts to care services for pensioners, cuts to libraries and so it goes on. Feast with all of that, Presiding Officer, Scotland needs a government that is bold and ambitious, a government that will invest to grow the economy. Instead, it has a government that is timid, focused on the short term and completely lacking in ambition. Paul Gordon-Linters, around 10 minutes please, Mr Linters. Thank you, Deputy Presiding Officer. We've heard today that our country stands at a budget crossroads, a crossroads where many options are open to us. Any of those options can significantly impact not only our future but those of generations to come, for better or for ill. As my Conservative colleagues have pointed out, the SNP road is one of underperformance, marred with potholes of failure. An annual growth rate of only 0.6 per cent compared to 1.7 per cent across the UK. Something the Scottish Fiscal Commission says will not catch up in the next five years. GDP growth a third of the OECD rate, as we found out yesterday, and a growth rate 3 per cent worse than many small EU countries. Those are just some of the indicators pointing to an economy under the SNP, struggling to keep pace with the rest of the developed world. Can we put a price tag on the toll for us on this highway of incompetence and in response to John Mason? It is not, of course, just about economic growth and money, but the cake has to be baked before it is divided up fairly. We have heard the price tag already. An estimated £16.5 billion, the cost of the growth gap from failure to match the UK economy as a whole between 2007 and 2022. The Fraser of Allander Institute has rightly pointed out that one SNP favourite excuse among many, Brexit, is not a valid one, given that in 30 of the 42 quarters since the SNP came to power, Scottish growth has failed to match that of the UK. A decade of SNP failure for this country. Today, we have an opportunity to set income tax rates at levels that encourage a reversal of these trends that could foster an environment in which the growth that we so desperately need can take place. To begin to provide that greater tax base that can fund our vital public services. Public services that are under strain of the pressure that is enforced on them by a Government that is determined to cut budgets, despite the block grant from the UK Government increasing in real terms. This is a regressive, not a progressive rate resolution that we see from the SNP Government today. Instead of seizing the opportunity, we see proposals today that play to the gallery. But which gallery? On closer inspection, they make neck-and-neck to no difference to lower income households, and they punish those that struggle to make ends meet. Before we even go on to consider council tax rises, which at only 2 per cent would wipe out savings from the starter rate. My colleague Bill Bowman's description of a return rail trip from Edinburgh to Dundee in his region highlights this. A rail trip which would more than use up the meager £20 savings handed down to someone on the starter rate. Stuart McMillan, I thank Gordon Lintos for taking that intervention. If that is the negative scenario that Mr Lintos is trying to paint, how worse would it be if there was a further £500 million worth of cuts that his party is proposing? Gordon Lintos? My party is not proposing to put in cuts such as your proposing in your question. We are proposing that the economy should be growing and the tax take increased. As we have heard from many businesses and business organisations, that is what needs to take place, not at the minute. Meantime, hundreds of thousands of income tax payers, the majority of whom are lower and middle income earners, will look on bewildered as the First Minister pats the finance minister on the back for raising their taxes. Primary school teachers, social workers and paramedics all now set to pay higher levels of income tax than those with equivalent jobs in other parts of the United Kingdom, not at this point. If the SNP thought that it was setting its sights on people with plenty of spare cash available to pay just a little bit more, it has completely misread the situation. It has already negatively impacted the incomes of those squeezed lower and middle earners when it used its new powers to offset income tax thresholds, making Scotland the highest tax part of the UK. It now reinforces its true colours by asking everyone earning over £26,000 to pay more than if they were in the rest of the UK. A colleague Murdo Fraser pointed out in his opening speech that, if that is the only income within a household covering one or two adults and children, it is not the rich that the SNP are targeting, it is hardworking families that often struggle to make ends meet. They do their best, and is this the thanks that this Government gives them? How can this actually work in practice? We have a recruitment crisis in general practice north of the border. How does making GPs pay almost £1,000 more on an average salary health? At one time, this Government used to tell the benches on the left that raising the top rate was daft, and yet now Derek Mackay is doing just that, just what the Greens ask. The reality is that household savings in Scotland have dropped to their lowest level since 2006, and at the same time disposable income will remain stubbornly flat until 2020-21. Raising taxes will not turn this around. The Government does not need to take the word of the Scottish Conservatives for this. Others, already quoted today, have given the warnings coming from the business community. 79 per cent of businesses who told the Federation of Small Businesses that they did not want to see a tax rise, or the Scottish Chambers of Commerce who warned of the years that it will take to repair the damage inflicted by higher taxes. It seems, Jackie Baillie, that they think that it is a choice between higher taxation and higher growth. Perhaps he could explain to me in this grand scheme to grow the economy, which I support. I think that we should be growing the economy. How much it will raise, how much the economy will grow by in year 1, 2, 3, how much additional revenue it will raise when we are faced with Tory cuts now? I have already said that the difference is £16.5 billion lost. I would like to know how much tax revenue will be lost when the budget goes through the consequences of something that you not only support but should go even further in the wrong direction. This is the pay more get less budget, which almost two thirds of the voters at the last Scottish Parliament election did not vote for. The SNP would be wise to listen to all those businesses who understand the importance of creating a competitive tax environment. That, as I close, is a road to economic prosperity rather than a road to economic ruin. I call Derek Mackay to close this debate at around 15 minutes up to decision time. I would like to then take a moment to reflect on Scotland's economy, because I fear that some people, maybe even deliberately, have been trying to talk down Scotland's economy, because on a range of indicators, if compared with many other parts of the UK, it shows a very resilient Scottish economy. The Tories, the antithesis of Scottish Enterprise and Scottish Development International, should maybe promote our economy a wee bit more rather than trying to talk it down quite so much. When we compare GVA with other parts of the UK, we are performing well. Yes, it is a difficult comparison when made to London and the south-east of England, but we know that the UK economic model is centred around that. When we make a fair comparison on productivity on GVA, we perform fairly well. In fact, productivity has improved over the period of devolution. Output has also improved, and median weekly earnings in Scotland are at £547, the third highest in the UK countries, and again only behind London and the south-east of England. When it comes to foreign direct investment in 2016, again Scotland attracted more FDI projects than any other part of the UK outside the UK and London, of course. Jackie Baillie Would he perhaps accept that productivity in Scotland has improved only because it is measured relative to the rest of the UK, and that is where productivity has dropped? In terms of foreign direct investment, he talks about more projects. That may be so, but are there more jobs? In fact, jobs have declined as a consequence. The FDI projects are referred to amounting to securing over 2,800 jobs, and in relation to productivity we have made that progress during the period of devolution. It was actually Gordon Lindhurst who I was surprised at when he said that we should be comparing ourselves to other small independent EU countries. Well, maybe we should if we had the powers of a small independent country within the EU. When I have spoken to businesses, because I actually conducted a range of stakeholder events before, during and after the tax proposition, yes, they raised a number of issues with me and they welcomed the investment that has been put into the budget around the economy, business and innovation. He said to me that an even greater challenge than any perceptions around tax was consumer confidence being affected because of the uncertainty of Brexit. That is not an issue of the Scottish Government's making, that is an issue of the UK Government's making and I am sorry to every member of the Tory party. I simply cannot abdicate your responsibility for macroeconomic policy when it is clear that the UK Government has responsibility for macroeconomic policy, including in Scotland. In terms of the economy, the investments that we will make, partly coming from our tax plans, the investments that we will make include a 64 per cent increase in the economy jobs and fair work portfolio, £2.4 billion in enterprise skills, higher and further education, a 70 per cent uplift in funding for business research and investment and development, the news house of Scotland enterprise agency's initial injection of funds and doubling the financial support to city region deals to £122 million. Of course, as well as the new national manufacturing institute, a low carbon innovation fund and the reaching 100 digital programme to take super fast broadband to every part of the country, as well as modern apprenticeships and the growth of free childcare. Those are all interventions to help to stimulate and support our economy. When we look at the tax plans specifically and the process that got us today, the Scottish rate resolution contrary to what a number of Tory members have said, it's been methodical, it's been well received, it's clearly been considered as a fair process. Mike Rumbles? I thank the minister for giving way. I did lodge a written question on this on the 1 February to which I haven't had an answer yet. Maybe the minister could give me that answer. The more complicated tax structure we've got now, how much has that cost to administer by HMRC? Can you let us know what the difference is? Derek Mackay? I have set out the cost as we understand them. HMRC gives us the final cost following the tax proposition that is agreed by Parliament. They expect the additional cost to be less than £5 million. Latest estimates are £3.5 million. I don't set that. UK Government HMRC sets that and I'll give the most up-to-date answer I can when we come to that written question. The manner in which we've conducted this tax debate is a good and a healthy thing for a Government to consult on its proposition going into a budget in the way that we did. It has public support. We know that through the polling that's been conducted. It didn't ask just general questions, it asked very specific questions about the Scottish Government's tax proposal. In terms of the way that we conducted the discussion paper, Fraser of Allander Institute said that the Government should be commended for publishing the options and implications in such a transparent and rigorous manner. The resolution foundation said that the Scottish Government has released an impressive report outlining in plain language the principles that it thinks should drive this decision. Again, in the stakeholder events, it was clear to me that people appreciated the engagement. In terms of other member's contributions to the debate, Murdo Fraser just can't accept the fact that 70 per cent of taxpayers will pay less under our plans. Scotland will be the lowest tax part of the UK, not in the right-wing way that he would like it to be at all. It's very interesting that the Tory's priorities in that regard. Murdo Fraser told me that he stood ready to vote for my budget, but he said only if I proposed to cut £556 million from our public services that this Government is not willing to do. In relation to the basic rate, a majority of basic rate taxpayers will actually pay less. As the Tory's listed public sector workers in terms of their tax position, they didn't point out that those public sector workers will enjoy a pay rise in the only part of the United Kingdom where the pay restraint or pay cap of 1 per cent has been lifted. In terms of the anomalies, they have been addressed over the course of the constructive engagement that I have had with the Greens. In terms of administrative matters, those are still reserved to Westminster. Yes, it is up to them to resolve them or not. Yes, my officials and I engaged early to ensure that they were resolved. It's for Mel Stride, the financial secretary, to the Treasury to answer why it is the day before this rate resolution is considered that he writes to confirm the way in which some of those matters will be resolved. In so many other matters, whether there is reserved responsibility, the Tories walk away from their responsibility of their UK Government. Just because of those issues, it would be wrong not to use the powers to respect devolution, to turn that real-terms reduction into growth in real terms for our public services in Scotland. There is a degree of co-operation with the UK Government, but it has to respect devolution and the decisions that we make as a consequence. In terms of perceptions around tax, Kate Forbes was absolutely right in pointing out that there has been expert opinion to say that the tax changes proposed are in themselves not a reason to upsticks and move. However, if the Tories keep propagating a negative image about Scotland's tax regime, then no wonder perceptions will be negative about Scotland when the reality is that it is leading to more investment, more investment in our public services, our national health service, our economy and education as well. Taxation in a fair, balanced and responsible way. Murdo Fraser had the cheek to raise council tax. In England, council tax is rocketing compared to what is happening in Scotland, but of course no new services and no public sector pay rise as well. To be fair to the Labour Party, at least the Labour Party produced an alternative budget. I do not think that it was particularly competent, but all the Tories have done is suggest that we cut taxation by £556 million and cut public services as a consequence. You can't instantaneously magic up the revenues to invest in public services whilst cutting tax in the fashion that the Tories have proposed. I'm very grateful for the cabinet secretary for giving away. Let me ask him the question that I asked Ivan McKee. The Mr McKee could not answer it and see if he can do any better. Over the years, we've heard SNP MSPs call for cuts in corporation tax, call for cuts in VAT on housing repairs, call for cuts in VAT on tourism, call for cuts in fuel duty and call for cuts in air passenger duty. Did they once say when they made these calls how these cuts would be paid for? This is my point. This is a serious budget, a serious rate resolution contributing nearly £13 billion towards our public services and that's what Murdo Fraser is reduced to. What a ridiculous position for Murdo Fraser. On the subject of ridicule, I would like to turn to James Kelly, who suggested that over £1 billion extra investment was required. I've already said to James Kelly before that the Labour budget just didn't add up. Income tax took no account of behavioural effects. That would reduce your tax take on income tax by around half. Tourist tax requires primary legislation, land value of tax. There's no basis for raising the figure proposed. Social responsibility requires legislation and use of the NDR pool. Even a Labour member, not present, has written to me demanding to know how I would get it back into balance. You don't get it back into balance by spending it all, which was the proposal for the Labour Party. So your budget amendment and proposal has been blown apart and all those commitments you've made as a consequence would not be delivered on the shoddy incompetent Labour alternative. James Kelly? Thank Mr Mackay for taking the intervention. He stands as a Cabinet Secretary ahead of a budget where Scotland has 260,000 children living in poverty. He may rail off a whole list of excuses, but what is he actually going to do to address the fact that over a quarter of a million children are living in poverty? Derek Mackay? Well, as well as the new fund to protect people from homelessness, the new funds to support actions against child poverty will protect tuition fees that students will not have to pay. We'll invest the more and childcare will continue to deliver free school meals to primary 1 to 3 children. We'll protect people from prescription charges. We'll continue to deliver NHS i exams. We'll protect concessionary travel. We'll invest more in the NHS above inflation. We'll protect free personal care. We'll build 50,000 new affordable homes. We'll invest in digital to grow economy. We'll support a range of people through specific targeted interventions. We'll invest more in police and fire. That's the kind of investments this budget will make raising revenues in a fair and balanced way. I'm the subject of raising revenue as a formality, Presiding Officer. I have written to the Presiding Officer about the connection between today's motion and the stage 3 of the budget bill, which of course cannot begin until the SRR motion is agreed to. For clarity, what members have been asked to vote for today is the ability to raise all the income tax in Scotland. That will raise over £12 billion. Our policy decisions amount to £219 million, not the figures that Labour suggested, and an additional £428 million against the block grant adjustment, which we have to approve before stage 3 of the budget tomorrow. But what the Labour Party is proposing to do is to align themselves with the Tory party and not raise a single penny in income tax in Scotland. That's what you will do by voting against the rate resolution before stage 3 tomorrow. I lied with the Tories. I know that it's Murdo Fraser's dream to raise no tax whatsoever and by shaking the magic money tree can spend more on our public services. I'm just surprised that the Labour Party have aligned themselves to that particular proposition. We should respect devolution, use our powers in a fair and responsible and balanced way, raise extra resources for our public services that turn that real-terms reduction into real-terms growth, supporting all our public services, lifting the public sector pay cap, giving the best deal of anywhere in the UK, delivering fairness, delivering a progressive approach, one that we engaged on and consulted upon, and a tax system that charts a new course for our public services. We are our country around fairness and tackling inequality. We've done it in a considered and a balanced way. It commands the support of the Scottish people by 2 to 1, and I believe that it deserves the support of this Parliament at decision time tonight. I urge all members to back the Scottish rate resolution that allows us to make the investments that are required in education, in the economy, in the environment to give stability, stimulus and sustainability of our public services. I'm very proud to move the motion in my name. Thank you very much, and that concludes the debate on the Scottish rate resolution. We will move shortly to the question on the motion. Before I put the question, I would advise members that under rule 9.16.7, stage 3 proceedings on the budget Scotland number 2 bill cannot begin unless the Scottish rate resolution is agreed to. We'll just wait a few seconds to make sure that all members are present. We'll move to the question. The question is that motion 10397 in the name of Derek Mackay on the Scottish rate resolution be agreed. Are we all agreed? We're not agreed. We'll move to a vote and members may cast their votes now. The result of the vote on motion 10397 in the name of Derek Mackay is yes, 67, no, 50. There were no abstentions. The motion is therefore agreed. As the Scottish rate resolution has been agreed, the budget Scotland number 2 bill can now proceed to stage 3. Stage 3 proceedings will take place tomorrow. There are no further decisions as a result of today's business, so we'll move now to members' business in the name of Christina McKelvie on quick credit voucher, but we'll just take a few moments for members to change these.