 We will turn now to our next item of business, which is a debate on motion 7070, in the name of Alec continuity on finance. I would invite all members who wish to speak in this debate to press the request to speak buttons now. I call Alec Misly to speak, and move, the motion in his name. When delivering her speech on the programme for government two weeks ago, Nicola Sturgeon said that the time is right to open a discussion about how responsible and progressive use of our tax powers could help us to build the kind of country that we want to be. I welcome that statement and Labour in this Parliament will work and engage in our country to actively engage in a discussion on this issue. In that speech, the First Minister said, and I quote, The quality of our schools and hospitals, the safety of our streets and communities, the supply of skills and good housing and infrastructure are just as important as rates of tax in growing our economy and attracting investment into Scotland. Nothing there I would disagree with, but I would suggest that the levels of funding available needs to be sufficient to ensure that we can achieve those high quality services and facilities, and that is the question at the core of this debate. For all those areas of public services after 10 years of SNP government, we do have major problems and issues that must be tackled. The Government cannot simply ignore that, nor can it legislate its way out of the challenges when many, not all, but many of the solutions require more resources to be made available. I am grateful to Mr Rowley for giving way. His party will have a position on tax very different to my own parties, but at least it sets out his view. Does he not think that it is a bit rich for the Scottish Government to ask the opposition parties to set out their stance on taxation when it will not tell us what its own stance on taxation is? I will come to the point about the Scottish Government. We will make it make the point about resources and not being able to legislate its way out. An example of that is that you can bring in new legislation as the Government is doing to set targets to eradicate child poverty, but unless you take direct action, the targets will be meaningless and the goal of eradicating child poverty will be nothing more than wishful thinking. On education, you can legislate, you can restructure, you can create more bureaucracy in the process, but unless you address the cuts to the school budgets, you will not tackle the core issues. 4,000 fewer teachers today than when the SNP came to power. 1,000 fewer support staff than when the SNP came to power. Class sizes bigger today than when the SNP came to power. Spending per pupil across all ages is down. If pupil spend had remained the same as in 2010-11, primary schools would be £726 million better off and secondary schools would be £308 million better off. There are wider issues to be addressed in education, but at the core of the school problem is the cuts. So, when discussing tax, how much we raise matters, it is also about how Governments spend taxpayers' money, the choices that Governments make. On that note, I read with interest the paper published earlier this week by Professor Jim Gallacher. The paper, public spending in Scotland, relatives and priorities reached the following conclusions. Scottish health spending has not kept pace with overall devolved spending. If it had, it would now be around £1 billion per year higher. Increased spending on health has been a lower priority than in England. As a result, English health spending per person has caught up closer to Scottish levels. Spending on Scottish schools has slipped over the past decade, with English spending catching up despite devolved spending on public services being around 25 per cent higher per person. When we talk about tax, we cannot do so in isolation from spending choices that the SNP Government has made over the past 10 years. We would suggest— Kate Forbes? Alex Rowley then welcomed our amendment in this debate today, which calls for cutting the 1 per cent pay cap and bringing an end to austerity. We would suggest, therefore, that part of the national discussion that we want to have on tax includes a discussion around the priorities for Scotland in these difficult times. A priority to pay cap is something that is welcomed and has to be paid for. On Friday of last week, the Herald newspaper carried an article stating that the finance secretary was asking other parties to send him their latest income tax plans in order to open up discussion on preparations for the draft budget. The point that I have already made is that we need to consider spending alongside considering taxing. It is also important to look at income tax in the context of other taxes, and we must consider what other policies the Government has that can increase the tax take across Scotland. Our view is that the finance secretary must drop the proposal to cut air departure tax by 50 per cent, a tax cut that will cost the public purse nearly £190 million. That is £190 million tax break that Scotland cannot afford whilst our public services buckle due to a lack of finance. The Parliament must also unite around the demand to the UK Government to remove our police and fire services from paying VAT. Police Scotland pays between £23 million and £25 million in VAT annually. Scottish fire and rescue services pay approximately £10 million in VAT annually. I know that the SNP was repeatedly warned about what would happen on VAT, and that is a fact. Nevertheless, we are where we are and it is not right, and we must stop this unfairness. The Treasury's principle argument is that, because we have moved to a national service, VAT must be paid. However, the police service of Northern Ireland and the Northern Ireland fire and rescue service are national services, and they do not pay VAT. Since Police Scotland came into being in 2013, several national agencies that operate in England have been giving VAT exemptions, so we need that VAT exemption for Scotland. I hope that all parties in this Parliament will unite around a call on the UK Government to sort this and to sort this now. Returning to the First Minister's speech for government, Nicola Sturgeon said that our new planning bill will also help to secure the housing development that the country needs. I do not think that it will help unless the Government gets to grips with the problems that are stalling development right now. It is not just the planning system at fault, it is the lack of upfront money to deliver the infrastructure that will enable development like roads, schools and health centres. We need to work with the industry and local authorities to find a way to overcome the barriers, including the very real barrier of front-loading infrastructure costs. We need a national house-building strategy, local delivery plans and a skills strategy for Scotland. We need the investment to make all those things happen. The more people we get skills for, the more jobs we create, the larger the tax take we have. It is not just about increasing tax, it is about increasing the numbers of taxpayers and it is about increasing the total tax take for Scotland. I was pleased to hear that the First Minister has committed to publish a paper on tax before the budget to influence the discussions with other parties. Labour has said that we should use the powers of this Parliament, and we did publish our tax proposals for last year's budget. We said that we would put a penny on the basic and higher rate of taxation and introduce an additional rate of 50p for those with over £150,000 a year in order to invest in public services. We set out what that would mean for people and let me set it out again. If you earn below £21,000—I am sorry, I have to make progress. If you earn below £21,000, you would not pay up any more an income tax now than you did last year. If you earn £28,000, you would now be paying just over £1 more a week an income tax. That is £65 a year. If you earn £41,000, you would now be paying an extra £3.90 a week an income tax, just over £200 a year. Anyone earning £61,000, such as MSPs, in this place, you would now be paying an extra £10 a week under our proposals, £526 a year. If you are a Government minister, earning £90,000 a year, you would now be paying £17 more a week, around £900 more a year. At a time when we desperately need investment in our public services and in driving Scotland's economy, it is right to consider using the tax powers of our Parliament in a progressive way, ensuring that those who are able to pay a bit more do so. The SNP has voted against introducing a 50p top rate of income tax on the highest earners eight times since 2015. Analysis confirmed by the Scottish Parliament Information Centre shows that Labour's amendments to the previous two budgets for 2016-17 and 2017-18 would have raised just over £1 billion in additional tax revenue compared to the tax plans that were passed by the SNP. Using data provided by HMRC is evident that not only has the total income of wealthier people in Scotland that has those earning over £150,000 increased by 68 per cent between 1011 and 1415, but the number of wealthier people almost doubled between 2010-11 and 1718. I am not opposed to wealth, but those who have a bit more must surely be asked to make a bigger contribution towards a better Scotland on the grounds that they can afford to do so, and it benefits all of us if we live in a more fair and more equal society. We say that it is no longer acceptable that the SNP Government protects the richest whilst cutting services for the poorest. A millionaire has paid less than £2 a week extra in income tax because directly of SNP policies. We are happy to present our tax policies to the Government and enter into a discussion, but on one thing we are clear, they need to change theirs. Exactly 15 years ago, when the NHS faced enormous problems, it was our Labour Government that stepped in and doubled the budget. Today, many of our public services face enormous problems, and there is a desperate need for investment in services in people and infrastructure. It is time once again to make the case for a tax rise, for those who can pay a bit more to do so through a progressive tax system and to build a more fair, more just and better Scotland. I move the motion in my name. I am pleased to have the opportunity to debate income tax policy this afternoon. Discussions on income tax will form an important part of our wider engagement, as we work to present our draft budget to Parliament later in the year. As we know, this is a Parliament of minorities. For consensus to emerge, there must be compromise, and for compromise to be found, there needs to be a recognition of the responsibilities that we all share. For the Government's part, we enter into those discussions on tax, like the other parties, with a set of manifesto commitments, but we recognise that if every party simply votes for their own position on tax, we will have stalemate. This Parliament of minorities needs a responsible Government and a responsible Opposition. As we announced in the programme for government on 5 September, the Government intends to publish a discussion paper on income tax. That will, we hope, facilitate an open and constructive debate about how we ensure the sustainability of our public services, whilst giving certainty to taxpayers. I am interested in the timing. Could it mean that we could have tax increases in the coming budget, whereas it is the intention that the paper is not concluded until the following budget? Are we going to have to wait until 2019-20 before we see any real change? It is my intention that this discussion paper enables debate for this budget, and in that regard, I encourage all political parties, including the Liberal Democrats, to engage positively in that debate and in that paper. Then we can make progress. If Murdo Fraser will allow me to make more progress, I am just into two minutes with page 2 of my speech. Let me make further progress. We look forward to publishing the paper and encourage all political parties to engage. To facilitate the discussion, at decision time tonight, the Government will not, with the exception of opposing the Tories' attempts to impose further austerity by reversing the tax decisions that we have already taken, take a position on the amendments from Labour, the Lib Dems and the Greens. I want there to be an open and constructive debate, and so I and my colleagues will not prejudge the outcome of that discussion. As well as the political discussions, like the one that we will have this afternoon with politicians, we are also planning engagements with business, trade unions and third sector organisations. We will commit to using this national discussion to help us to ensure that our tax policy continues to help Scotland to be the best place to live, work and do business. We are living in times of austerity. Despite the transfer of further responsibilities, Scotland's total dell block grant allocation will be reduced by 1.4 per cent. That is £411 million in real terms over the next two financial years. Between 2010, 2011 and 2019-20, the Scottish Government's discretionary budget will have been cut by £2.9 billion in real terms. The UK Government's approach to austerity has been neither fair nor progressive. While the Prime Minister lectures the country on the need for austerity, she has found an extra £1 billion to buy the support of the DUP to keep herself in power. At the same time as the Tories have cut budgets, capped welfare payments and introduced policies such as the bedroom tax and the rape clause, they have cut corporation tax, capital gains tax and inheritance tax and increased the threshold at which those at the top end of income pay the higher rate. We have always been clear. We do not and will not support the UK Government's toxic approach to tax breaks for the rich paid for by vital cuts and vital services. We have been similarly clear that we will simply not pass on the burden of austerity on to the poorest members of society. It is for that reason that, while we will not prejudge the discussion on taxation, we will not support the Tories amendment today that seeks to reverse last year's tax decisions and render useless the tax powers that this Parliament has. As we begin preparations for the 2018-19 draft budget process that sets the rates and bans of Scottish income tax, the Parliament has the opportunity to debate the future of Scotland's public services. However, that will not happen in isolation. Although it is true that an increasing part of our budget will be decided here in this Parliament, we cannot and should not ignore the impact of the UK Government's budget on our funding. Although Labour parties seem to suggest to ignore what has happened at Westminster, our amendment makes it clear that we demand of the Chancellor the following, an end to austerity, a lifting of the 1 per cent pay cap and a fair deal for the nations and regions of the UK, not the grubby deal for the DUP. And while we debate income tax, we cannot lose sight of what this fact is for. Isn't it clear that Mr Mackay is adopting the Ruth Davidson rape clause approach, that when you are on a hiding in nothing, you just keep your head down and keep reading a pre-prepared speech like a speaker wait machine? What an appalling contribution to such an important matter, the tax rates in this country, and how we fund the public services of Scotland if the front bench want to intervene, I'll take an intervention now. James Kelly. Thank Mr Mackay for taking the intervention. Do you not think that it's time that you come off the fence and supported increasing taxation in order to alleviate those hundreds of thousands of people who are lying in the public sector in Scotland? Cabinet Secretary. It's time. I think it's time for Opposition politicians to behave responsibly and come to an informed decision as to watch right to deliver stability, stimulus and sustainability of the public services of Scotland, and that's exactly the approach that we will take by engaging with politicians, yes, but wider Scotland in that fashion. I would say to the country that all taxpayers in Scotland benefit from access to more free at the point of use public services than are available in the rest of the UK. That will help us to attract the best workers because of the excellent quality of life living in Scotland can deliver. Protecting our public services is also why we have announced a lifting of the 1 per cent pay cap, ensuring that future policy will take account of the cost of living and protect those workers in our public services. However, if the First Minister set out in her programme for government statement, we know that in the face of continued Westminster austerity, the consequences of Brexit and demographic change, there will be increasing pressure on those public services. That is why now is the time to enter into this debate on how we use our income tax powers to help protect our public services and ensure that they remain sustainable for the future. As with all our tax powers, I am committed to developing a progressive tax policy, and we are committed to keeping progressivity at the heart of our income tax policy, as we believe that it is right for those who can afford to contribute the most that they continue to do so. In conclusion, I return to the need for this Parliament to engage in meaningful discussion, offer your suggestions, play your part in this debate. This Government's approach to tax is the responsible thing to do, and I ask members of the Opposition to do likewise in order that we may find the common ground. Thank you, Presiding Officer. I start by welcoming the fact that the Labour Party has allocated its debating time this afternoon to a discussion on tax. Those of us of a certain vintage will remember all the discussions in previous years around whether the Parliament should have tax-raising powers and be able to debate raising money as well as simply spending it. It is the devolution of additional tax powers to this Parliament by a Conservative Government, which now allows us to have those fully rounded political debates, with a Parliament that is responsible for raising a sizeable proportion of the money that it spends and has to consider the consequences of the tax decisions that it takes. That is a welcome and timely debate, not least in the context of what the First Minister said when she launched the programme for government two weeks ago. She wants to debate with other parties about income tax. Just last week, the finance secretary said that he was writing to Opposition parties asking us to set out our views on tax to help inform the debate. In this party, we have always been quite upfront with our views. Our position on tax was set out clearly in our manifestos for the elections to this place in 2016 and to Westminster in June this year, and it has not changed. The Scottish Government seemed remarkably keen on asking other parties for their views on tax, but remarkably coy when it comes to revealing its own ideas on tax. I listened with great interest to what the finance secretary had to say just there to try and get an inkling of what exactly the SNP is saying in this debate on tax, but I am none the wiser. In a second, the Scottish Government is expecting us to tell them what our tax plans are, but they will not tell us what they are actually proposing. It is a case of, you show me yours, but I will not show you mine. That is not the way to have a proper debate around those issues. I will give way to Gillian Martin who will tell me what the tax plans are. One of the things that I hear when I speak to the public and I am sure we all hear the same thing is that the public are fed up with politicians having entrenched positions on things. I wonder if I can finish my intervention. Are the politicians fed up with politicians of all parties having entrenched positions on things? Surely we should all be welcoming the fact that the cabinet secretary is saying, let's have a dialogue about something so important. I thank Gillian Martin for that individual, which makes my point for me. We are telling you where we stand on tax, or we are asking him that you do the courtesy of telling us the same in response. Why is there nothing from the cabinet secretary telling us what the SNP position on tax is when we are quite happy and, to be fair, the Labour Party is quite happy to say where they stand on those issues. To be fair, I am the Liberal Democrats too, and probably the Greens too. Is that covered, everybody? I might fundamentally disagree in standing with the Labour Party, but at least they are open. Does he accept that we should not be looking at income tax and isolation from other taxes, and indeed spend? Will he and his party get behind the call that all other parties in the chamber have for the UK Government to remove VAT from fire and police services? That is a discussion that I know that is on going at the moment. I would simply say—Mr Riley will know this—that the Scottish Government was well warned in advance of going ahead with the mergers of police and fire services that VAT would be charged in those circumstances. It is a bit rich for them to come along and lecture us on those issues when they knew the consequences of their actions. We have heard the SNP's narrative about Tory austerity. I have pointed that out in the chamber many times before, but I need to point it out again. The Scottish budget, in overall terms, is not lower today than it was in its previous high point of 2010, as the Fraser of Allander Institute analysis makes clear. The Scottish Government's discretionary spend may be down on its previous high point of 2010, but compared to 2007, the year that the SNP came to power, there has been no cut in the Scottish Government's discretionary spending power in real terms. The Cabinet Secretary for Justice knows that that is the case. Ten years ago, we were 10 years into a Labour Government in Westminster with Gordon Brown as Chancellor, who was not shy of increasing public spending. The idea that 10 years ago, public spending was running short is not reflected in the actual facts. All the shrieking about austerity does not reflect the fact that we were in the same position in real terms in 2007. Nor shall we forget that the general figures make clear that the level of public spending in Scotland is in excess of £1,400 per head of population higher than the UK average. Let me finalise this point and I will give way. I just wanted to make a point, because I would like to refer to Professor Jim Gallacher's comments from Nuffield College on Monday, when he made the very clear point that, in some cases, spending on public services in Scotland is 25 per cent higher than it is south of the border. The problem is that not enough of that money is reaching the front line. We should be spending the money better before we talk about raising more money. I will give way to the cabinet secretary. I thank Murdo Fraser for giving away and I look forward to the explanation as to how to fund all those tax cuts. Which area of Scottish Government expenditure will the Tories choose to balance the books? Murdo Fraser. Derek Mackay has not been listening. If he had looked at the analysis in the GERS figures, which I understand the Scottish Government supports by all the howls from their back benchars about how discredited they are, if he had looked at what Professor Gallacher had said in the report that came out on Monday, the point that he is making is this. There is far more money going into Scottish public services than is the case elsewhere in the United Kingdom, and yet, in too many cases, the outcomes are poorer. The answer, therefore, cabinet secretary, is public sector reform, not putting your hands into the pockets of hard-working taxpayers across the country. That is what he is doing. I suggest that he takes a leaf from the book of his colleague, the Cabinet Secretary for Education, who is adopting lots of excellent conservative ideas on education reform, about pushing money down to headteachers and giving them control of budgets. That is the sort of reform that we need to see, cabinet secretary. That is the way that we deliver a bigger bang for our buck. I will give you extra time for interventions. I have already taken three years for that. It is a matter for you, of course. If I am given extra time, of course I will give way. Cabinet secretary. Would Murdo Fraser not reflect on the point that we increase spending to education directly through the attainment fund and the fashion that Murdo Fraser is suggesting, and that Tori has voted against that as well? Murdo Fraser? I do not recall us voting against the attainment fund per se. We voted against his budget, because his budget was putting his hands in the pockets of hard-working Scottish families. The point is that you have plenty of money, cabinet secretary. You just choose not to be wise in how you spend it. Before you start raising more money from hard-working Scottish families, start using the money that you have got better. What we should not be doing, Presiding Officer, is raising taxes any more. We have already seen an income tax differential in response to the programme for government. We saw business organisations like Scottish Chambers of Commerce and the Scottish Retail Consortium expressing their concern about the impact that further tax changes would have on business and the economy. The Scottish Retail Consortium said that any notions about increasing income tax rates should be firmly knocked on the head as it could cast a pall over consumers spending a mainstay of the Scottish economy. On the irony of the SNP rhetoric around that, it is that they are all over the place when it comes to tax, because on the one hand they talk about a debate around increasing personal taxes, on the other hand, when the finance secretary stood in this Parliament just last week talking about business rates and announced a whole range of new exemptions in terms of business rates, which, of course, we welcome. He explicitly accepted the argument that business rate exemptions would help business and therefore help to grow the economy. They are arguing, of course, for cuts in their departure tax, a very sensible policy because that will grow the economy. John Mason, the man not usually shy in making the case for increased taxes, even put down a motion in Parliament last week supporting a case for reduction in air departure tax. Can you please keep it now or have it in the extra time? One way they are arguing for tax cuts, Presiding Officer. The very next week they are arguing for tax rises that they need to make up their mind, Presiding Officer. I have pleasure in moving the amendment in my name. I now call Patrick Harvie to speak to and move amendment 775.3. Mr Harvie, seven minutes please. Thank you very much, Deputy Presiding Officer. Always a pleasure, of course, to follow Mardo Fraser in a debate from the political party that entered office delighted and tickled pink, in fact. I have a note saying that there is no money left. He has now said that you have plenty of money, Cabinet Secretary. There is plenty of money. We are awash with money, and we just need to spend it differently. I really do not think that that stacks up. I acknowledge the way that Derek Mackay and indeed the First Minister have opened a debate, a discussion on taxation. I wish, of course, that we would have been there two years ago or more when the Smith commission agreed that income tax rates and bans would be devolved. That is when we should have begun the open discussion about immediately as soon as those powers are available, taking a more creative approach. However, we are where we are. Derek Mackay is correct when he said in his speech that if all parties just dig their heels in and stick to their manifestos, we will get nowhere. It is a point that I made to him in the letter that I sent to him on Friday in response to that call for submissions. I said that it would clearly be impossible for a coherent tax policy to emerge if all parties stick doggedly to 2016 manifesto positions. That is clearly going to be the case. If we want to make progress, all political parties that seek a more progressive tax system are going to have to be able to enter that conversation with a constructive spirit and to expect the same from the Scottish Government to be fair. I will remind people of the green manifesto position, not in the sense of digging my heels in, but in offering it as our starting point. We began with some central objectives. First of all, to raise adequate revenue, and we believe that there is a need to raise more revenue in Scotland than is currently being raised in order to achieve the quality of public services that people expect and demand. However, a purpose of taxation policy must also be to close the inequality gap. Those two central objectives should be ones that all parties seeking a more progressive tax policy should be able to support. In light of his own party's position, does he accept that introducing a new top rate of tax would not raise enough revenue to tackle the austerity that he talks of? Therefore, if the Government is serious about protecting public services, it will have to do something with the basic rate. Patrick Harvie? Indeed. To run through the changes that we suggested to the basic and other rates, we first of all do not accept the premise that, in order to raise more revenue and close the inequality gap, we have to raise tax on all low earners. Our first acknowledgement was, of course, that the personal allowance is reserved. We cannot change that. Not that we would wish to, not that we would buy into that rhetoric around ever-increasing personal allowance being progressive. They are not. The bulk of the benefit that goes from an increased personal allowance goes to people who are higher than average earners. The basic rate, though, we should not constrain ourselves and say that that must remain a single basic rate for all time. Our proposal was to split it into two—to reduce the first rate from 20 per cent to 18—and to increase the second rate from 20 per cent to 22. That would ensure that we put the tipping point—the point at which people start to pay a bit more income tax at the level of approximately the average full-time salary in Scotland. We based our figures on those that were available at the time in the run-up to the 2016 election, of course, and if they required to be revisited, we are obviously open to that. We then suggested an increase to the higher rate from 40 per cent to 43 and to the additional rate from 45 to 60. I acknowledge that there is an on-going debate—a discussion—about whether those additional rate taxpayers would, in fact, be paying more tax, whether we would increase revenue or whether we would, in fact, increase tax avoidance behaviour—the kind of behaviour that I hope most of us would deprecate and want to prevent, but which we have relatively few measures to prevent in Scotland. However, there is no evidence that I have seen that that tax avoidance concern is in any way relevant to the higher rate. There is some mixed evidence that it may be relevant to the additional rate, but there is not a reason to refuse to increase the higher rate. Additionally, because of that second policy objective that we have in our tax policies of reducing inequality, I would say that, even if the increases that we propose at the additional rate only have the effect of suppressing excessive pay demands by the super-rich, that is a good thing for society in its own right. The effect of that, obviously, those earning below the personal allowance would continue to pay no income tax. Those earning £14,200 a year, compared with the rest of the UK, as it stood at that election period, would be paying £54 less per year in income tax. Those earning £27,710 would be paying £24 more a year, so it is that tipping point of roughly a full-time average salary. Those earning £40,000 a year would pay £270 more per year. Those earning, like ourselves, on MSPs' salaries would be paying £1,200 a year. I refuse to accept that anyone on our very generous salaries cannot afford to make that contribution. I am sorry that I did not calculate what the cabinet secretary on his cabinet secretary's salary would be paying, but the highest-paid public post at the time was the chief executive of Scottish Water, being paid something in the order of £250,000. He would be paying nearly £14,000 or more in taxation, and on a quarter of a million pounds of income, I refuse to accept that such a person cannot afford to make that extra contribution. Since this time, we see increased inequality, increased public pressure on public services, and we see the need urgently to end the public sector pay cap. Like Alex Rowley, I recognise that that must not just be done but must be paid for if it is not going to result in more job losses in public services. At the same time, it must be paid for if we pay for it by increasing taxation on lower than average earners, how much progress have we really made? How much better off will they really be if their pay goes up a bit and their tax goes up a bit as well to pay for it? Very briefly, Deputy Presiding Officer, the first half of the SNP's amendment I have no objection to at all. The second half seems altogether too neutral. It also pre-empts our own amendment, so we will vote against it. The Conservative amendment seems to be based on the principle that there is never a case for increased tax rates in one jurisdiction than another. If it works one way, it works the other way and it amounts to an opposition to the principle of tax devolution and the Liberal Democrat position. I await with interest. I hope that it is not still predicated on increasing buy-a-penny to all earners, including those below an average salary. I still see no reason why people on below average incomes should be asked to pay more tax. I move the amendment. I call Willie Rennie to speak to a move amendment 7750.27 minutes, Mr Rennie. Thank you, Deputy Presiding Officer. This is a rather great opportunity to discuss tax, and I am grateful for Patrick Harvie that he has read out the Green Party's tax code this afternoon, because we are all much more well informed as a result of that. What we should be focusing on is the real principles behind the decisions that we need to take. We will be engaging with the finance secretary on this year's budget. We will do it constructively, just like we did last year, just like we have done it in every other year since I have been leader and before that, too, because it is important that, with a Parliament of minorities, that we seek to work together wherever we can. We will not just agree to anything—of course, we have to have significant concessions from the Scottish Government to refit the fact that it is not a majority in this Parliament. That is why we will be putting forward our proposals. We have set them out very clearly in election campaigns, and I will proceed to set out our proposals this afternoon. It is quite instructive to also learn about the other party's proposals, because the Conservatives seem to adopt an approach still of a small-state approach, cutting tax at every possible opportunity irrespective of the consequences. The Labour Party seems to be in favour of increasing it sometimes at every opportunity, no matter what the consequences are. I am not quite sure what the SNP position is, because I have to admire the rhetoric. The rhetoric is fantastic. It condemns the Conservatives for cutting expenditure, but then follows the Conservative budgets almost to the penny in our budgets. Despite the fact that we have many more powers in this Parliament, it is something that my party was at the forefront of arguing for, and we were able to deliver in that great coalition between 2010 and 2015. On that point, I will hand over to Murdo Fraser. The point that I was going to ask Mr Rennie is whether he agrees with me that this discussion that we are having around tax, where all the Opposition parties are setting out their tax plans, that discussion would be considerably enhanced and enabled if the Scottish National Party were to tell us what their tax plans are. Willie Rennie? I would slightly disagree with Murdo Fraser, because I think that the fact that they are prepared to have this discussion is an indication that they are prepared to move away from their manifesto commitment. That is a significant point that the chamber has not identified so far, and it is something that we on those benches would welcome. I hope that it indicates that. I was pleased that the finance secretary in response to my intervention earlier on did indicate that it was possible that it could happen this coming financial year, that in fact we could have a change in the spring of 2018, as early as that. I had concluded that what the finance secretary was up to was to publish a discussion paper to trash everybody else's tax policies in advance of the budget proposals, but I do not think that he is as cynical as that. I do not believe that that would ever have been in his mind at all. However, there is an opportunity for us to perhaps push the finance secretary a little bit further so that he is prepared to move away from the manifesto commitment that he made only last year. That is an encouraging step, but so far, despite that tough rhetoric all the years in Government, they have tended to follow almost exactly to the penny and the budgets of the Conservative party. Perhaps we might get a change this coming year, and that would be a welcome thing, because we might be able to get the investment that we are looking for. Liberal Democrats are not in favour of increasing tax automatically at every opportunity or cutting tax at every opportunity. It is about a balance, and we recognise that it is a balance between public expenditure and personal expenditure—the ability of people to be able to afford to live their daily lives, as well as the Government to be able to afford to provide the services that we all need and depend on. Our proposal on tax is a limited proposal, not an indication of more to come, but a proposal to increase taxes right across the board, as some others might prefer to do. It is a limited proposal of a modest penny on income tax, worth £500 million, which we would invest in education. We would call it hypothecated taxes in order to invest in colleges, schools and nurseries, because we have a fundamental problem with our education system. It used to be one of the best in the world, and it is now just average, and that needs to change. We believe that we have sadly concluded that we need to raise more tax in order to put that investment into colleges, schools and nurseries. 150,000 places—not just that—cut from our colleges. The whole principle of lifelong learning has been abandoned by this Government. We need to invest more in women and mature students. We have advocated a pupil premium for years, and eventually we have the Scottish Government to embrace the policy after condemning it all that time. We now need to catch up. We believe that there needs to be more investment in the pupil equity fund, as the Scottish National Party prefers to describe it. Nurseries—one of the biggest revolutionary steps that we can take is the best educational investment of 30 hours for two, three and four-year-olds. We need to invest in buildings and also in the training of the staff to be able to fill those nurseries. Those are big expenditure items that will have a transformational effect on education and will benefit the economy for the longer term by providing the skilled workforce that we need to drive forward standards in our society. That is our proposal. The reason why we are proposing a penny on income tax across the board and the basic rate is because that great Conservative Liberal Democrat Government managed to increase the tax threshold going up to £12,500. I have not heard many people congratulating us for doing that exact proposal, but as a result of that, you would have to earn something like £20,000 before you would pay a penny more in tax. As a result of that, from one year to the next, somebody with £100,000 would be paying 30 times more than somebody with £21,000. That is quite progressive and I believe that that is why we can afford to do that and protect those on low incomes. Those who ignore that deny the facts. One final point that I would like to make is just a bit more information from the finance secretary on his discussion paper. We have had an indication of when that is going to be published in time for possibly this year's budget, but I want to know who is going to write this. Are the special advisers going to have a role? Is it going to have conclusions? Is it going to have a narrative to it? Or is it going to be evidence-based? Is it going to be facts and figures? Or are the SNP special advisers going to put some kind of spin on it? What I would like to do is the basic facts to be presented so that we can all draw our own conclusions to inform the debate. I am deeply worried that the SNP uses that as an opportunity just to shape the other party's proposals and promote their own proposals instead. I would like some reassurances from the finance secretary on that. Please move your amendment, Mr Rennie. I have only three minutes in hand for interventions. I want to give people opportunity to have extra time for interventions. Once that is run-out, take an intervention and it has to be within your five minutes. Jackie Baillie, please. Five minutes. With only five minutes, I will dispense with the niceties and cut to the chase. If you want decent public services, you need to pay for them. If you want the best possible education, good schools, top quality teachers and well-resourced classrooms, you need to pay for them. If you want the best possible healthcare and well-resourced NHS where staff are valued and patients are at the heart of all that you do, you need to pay for that, too. However, if you want to end austerity, which the SNP has chosen not to do, if you want to stop being a conveyor belt for Tory cuts, you need to make different choices about what you value. It is not rocket science. Had Labour's proposals on taxation been accepted, this Parliament would have raised an extra £1 billion over the past two years. That would have ended austerity and invested in the public services that we all value. Does the member think that somebody on £12,000 a year should pay to end Tory austerity? Look, somebody on £12,000 a year would not have had to pay to end Tory austerity. You could have made choices in Government that actually ended Tory austerity. You deliberately chose not to do so and Scotland should not forgive you for that. I well remember that it was Nicola Sturgeon who rejected those proposals, saying that it would not be radical, it would be reckless, it would not be daring, it would be daft. A mere 18 months later, the First Minister has changed her tune about tax. Is that because there is a yawning gap in their budget? After all, they start with having to find at least £190 million just to stand still. Derek Mackay's sleight of hand last year was to bundle together underspend, which had yet to be reported, financial transaction money and changes to the budget exchange mechanism. All of that for one year only. Then there is the SNP's spending commitments for the years ahead, an increase in health spending by £500 million, maintaining real terms funding for the police authority, doubling childcare provision. Then there are the commitments to higher and further education, reducing the attainment gap, concessionary travel, although I think that you might be moving away from that, greater welfare spending. What is the price tag for all of those things? In 2016-17, there were projections for a budget cut of 3 to 4 per cent in real terms by 2021. I heard the cabinet secretary use a different figure, but it would be useful to have clarity on Scottish Government forecasts for the next few years to inform discussion about the level of taxation that might be required to close that gap. I have heard rumours emanating from the cabinet secretary's office that he is looking for an extra £600 million. That is the scale of the cuts that we would face. I noticed that he did not like my suggestion, but neither did he deny it. To cover that cut in the budget and use spending commitments could mean that some unprotected areas of the budget could face cuts of 10 to 17 per cent. That is simply staggering. No wonder the SNP now wants to talk about tax. There is the ending of the public sector pay cap, which Labour campaigned for and strongly believed in. I am pleased that the Scottish Government has finally come round to agreeing, but if you take a 1.5 per cent pay rise across the Scottish Government areas of responsibility, the civil service, NHS, police and fire, that could cost an extra £150 million each year. Already there are requests for much higher rates of pay. That figure does not even include local government. I am disappointed, however, that despite the additional powers over revenue raising, the SNP amendment focuses in part on the UK Government. I hope that the SNP is not suggesting that a pay rise in Scotland is conditional on what the UK Government does, because that would, I will indeed, be letting workers in Scotland down very badly indeed. We will have to be brief. The member has come into her last minute. Thank you very much. Unlike the Labour Party in Wales, this Government will lead by example, and we will not wait to see what the UK Government does on lifting the pay cap. Jackie Baillie. I very much welcome government action. It follows years upon years of the cabinet secretary and his predecessors writing to the pay bodies saying that the cap at 1 per cent should remain, so we will wait and see what you do. The SNP Government needs to tell us the size of the cuts that are coming this year. It needs to share with Parliament the scale of the spending pressures and the need to set out its taxation proposals. Isn't it interesting that the only party in this chamber that has yet to set out its proposals for taxation is the SNP? That is simply not good enough. The SNP amendment is weak, it is wholly inadequate and it is truly pathetic, but what I will give you is that it is consistent. Blame somebody else, ask others for their ideas so that you can copy them and, when all else fails, dissembl hide behind assertion rather than taking action. I thank the Labour Party for being so quick and willing to work with the Scottish Government on tax matters. It has been less than a week since Derek Mackay announced the Government's intention to hold a big discussion on taxation, and the Labour Party, uncharacteristically quick to collaborate, has used the first debate slot to do exactly that. Perhaps we will be able to help the Labour Party to think through its own position on tax. It talks about wanting to increase tax. Is that in line with the Scottish manifesto, the UK manifesto or something in between? The Conservatives have been, on the other hand, characteristically less welcoming, condemning us for not prejudging the outcome of the discussion. I want to spend my time touching on two issues—one, the limits of income tax as a single tool to transform the Scottish economy, and two, the importance of growth. The new discussion on taxation is, of course, only one side of the balance sheet, and we generally spend more time in this chamber debating the other side—what kind of country we want to be. That is what our amendment highlights this afternoon. End austerity becomes the only Government in the UK to lift the 1 per cent pay cap and provides certainty for taxpayers, public services and the economy. I can only presume that Labour will welcome this wholeheartedly despite its own Government in Wales not lifting the 1 per cent pay cap. Whatever we agree or disagree on this afternoon, I know from the debates that both the Conservatives and the Labour Party have held in this chamber in their own time that we all believe that it is important to invest in the future. Take housing, for example. This time last week, the Conservatives called for more investment in housing and they have done the same on health, on education and never mind all the portfolio questions on funding for other issues. They are perfectly entitled and commendable to do this on behalf of their constituents, but I would like to know where and how they expect to pay for it because cutting taxes is not going to help. Murdo Fraser? I want to ask Kate Forbes for giving way. I wonder if she read the analysis from Professor Jim Gallacher of Nuffield College that was published on Monday in relation to the Scottish budget, where he made the point that headline spending of Scottish public services was far, far higher than that payable south of the border and yet outcomes were substantially poorer. Does that not suggest that there is scope for spending money more wisely than we are currently doing? Kate Forbes? It makes an important point about the fact that the priorities of the Scottish Government are to ensure that money is spent on health and education and that Murdo Fraser is quite right to comment that public spending, particularly on the NHS, is higher in Scotland because that is a devolved matter. Of course, we need to continue to have that discussion on how we spend money. If we can start with a bit of collaboration around tax and hopefully we can continue that collaboration around other areas of the economy, because cutting corporation tax, capital gains tax, inheritance tax and increasing the threshold for those at the top end of income tax will not pay for that increased investment that we want to see at the cutting edge of public investment. To the purpose of the discussion on taxation, and our discussion on taxation is pretty narrow, it is essentially around one tax and we only have half the powers of that tax. Income tax is just one tool in the toolbox and we have only got powers over rates and thresholds, I am sorry, I am going to keep going. We do not have powers over the personal allowance, gift aid or other allowances, we do not have powers over savings or dividends and in terms of the full toolbox of taxation, we do not have powers over capital gains tax, corporation tax or inheritance tax. Of course, taxation is only one fraction of our budget from devolved taxes. I am not going to mention that our overall budget continues to be reduced as Murdo Fraser admitted as a result of austerity. I am going to use the Tory's own argument in calling for economic growth, but you cannot grow by cutting. The UK Government's approach to our economy has been weak and unstable and it has huge consequences for every nation in the UK. The current condition of the UK economy is a very, very poor advert for austerity. After years of politically motivated austerity, we have slow growth, rising inflation and low wages. In June, the UK economy fell to the bottom of the EU growth league as the first quarter figures of 0.2 per cent GDP growth was lower even than Greece, where growth was 0.4 per cent. However, it is against that challenging backdrop that productivity growth in Scotland is outperforming the rest of the UK. We have secured more FDI projects than any other parts of the UK outside London, and the unemployment rate is close to record 0. We will continue to grow the economy, we will have a frank discussion about taxation and we will continue to invest in the future of our country by calling for an end to austerity. I would like to point out that I am the PLO to the cabinet secretary. There is now no spare time in hand, so interventions will have to absorb within the five minutes that members have allocated. I call Bill Bowman to follow by John Mason. Let me begin by recognising that the parties of this Parliament have a common purpose, even if we disagree how best to do it. We all want to see a fair tax system that allows us to support world-class public services. On those benches, we do not believe that the way to do that is by saddling hard-working Scots with ever more taxation. What we should be doing is working to boost the economy and grow the tax base to generate bigger tax receipts for longer. I welcome the comments from Opposite earlier about that. For example, we might debate the detail, but I welcome efforts by the SNP to cut the air passenger duty to boost tourism and Scotland's participation in the global economy. I have welcomed efforts from the SNP to avoid raising income tax. Last year, just before the Scottish Parliament election, the SNP promised to freeze basic rate during this Parliament, increase the higher rate threshold in line with inflation, and Nicola Sturgeon even called suggestions to increase the additional rate that is dafft. Let me make some progress, please, thank you. Fast forward, and they have now refused to rule out a basic rate increase, have said that they are considering increasing the additional rate and have sold off their higher rate commitment to buy green support for their budget. Sadly, that is the sort of opportunistic approach to policy that we have come to expect from the SNP, more concerned with boosting votes than the economy. The economy certainly needs a boost after a decade of SNP economic failure and the constant threat of constitutional uncertainty. Compared to the UK as a whole, Scotland's growth has been sluggish, businesses face enormous rates increases and we narrowly dodged the recession earlier this year. To make matters worse, the SNP has given Scotland the dubious honour of being the most heavily taxed part of the UK. Thank you, Bill Bowman, for taking the intervention. Can I ask Bill Bowman who has spent two minutes talking about the SNP's position? Can he explain the position of the Conservatives' Party on income tax specifically? Thank you for that intervention. I think that I have covered that. Let's contrast that with the 2.5 million Scots who can keep more of their money thanks to the income tax cuts by the UK Conservative Government and our commitment that Scotland should not have a higher tax burden than the rest of the UK. Both the IFS and the Scottish Chambers of Commerce have warned against the SNP's higher tax agenda, and we believe that such warning should be heeded to ensure that Scotland is not put at a disadvantage. I am sure that there is no shortage of ideas on how to use Scotland's tax powers to boost our economy, and I know that Mr Mackay has been an herald asking for such ideas. Given the hints that he might soon raise taxes, it would be a welcome development if the cabinet secretary is serious about engaging with different opinions because whenever taxation is raised, the chamber loses one of its great strength, its diversity of ideas. That diversity is all too often replaced by a two-party system, the Scottish Conservatives and the left-wing consensus. We see it playing out already. In addition to having increased taxes last year, the SNP are threatening another assault on workers pay packets with Labour and the Lib Dems cheering them on, while the Greens tax plan seems designed to wage war on any and all disposable income that we have. Time and again, we hear them together whistling that same sir tune, tax and spend. However, as the tune in Scots do not want to listen to, a recent poll found that only 13 per cent support and increase in the basic rate and 44 per cent, fewer than half, thought that the higher rates should be increased. Even raising the additional rate did not go down well with just a third thinking that it would boost the economy. The left-wing consensus sells Scotland short because it has already decided on the answer before asking the question. It is not should we raise taxes but by how much. It is not how do we get the best value for taxpayers but how much more can we spend. Where is the outrage at the £178 million spent on the SNP shambolic CAPIT system, which is now 75 per cent over budget? Or at the £5 million court find written off? Or at the hundreds of millions in LBTT revenues that were not generated as expected? That is money that could have gone into critical public services and it shows why we need these debates to move beyond simply assuming tax rises. We believe in working with others where there is common ground but we also believe that Scotland is ill-served when common ground turns to ideological dogma. Scotland's workers cannot afford a Parliament seeking to pick their pockets. Increasingly, people recognise that it is only the Scottish Conservatives who offer a genuine alternative to the high-tax agenda that is put forward by the other parties. We are already delivering for Scottish taxpayers at Westminster and we want to see a fair deal for them here at Holyrood. I call John Mason to follow by Neil Findlay. Mr Mason, please. Thank you, Presiding Officer. Clearly, tax can be too low so that we cannot afford decent services or it can be too high so that people move out of the country or go to great lengths to avoid and evade tax. In amongst all the heat and the rhetoric, we are trying to find the right balance today and over the coming weeks between the level of tax and the level of expenditure. I certainly have heard some people say to me that they are prepared to pay a bit more tax in order to protect valued public services. However, it is true that I have also heard constituents say that it is unfair to raise taxes when costs are going up and wages have been largely static. The SNP has been reluctant to increase income tax, especially for low earners, and this is especially the case for very low earners who face a marginal rate of 32 per cent when income tax and national insurance are combined. This is especially unfair when additional rate tax payers and 45 per cent are only paying 2 per cent NIC, giving a total of 47 per cent. We certainly do not have a very progressive system at the moment when the lowest rate is 32 per cent and the top rate is 47 per cent. My first point would be that if we were to design a truly progressive income tax system, we would need control of both national insurance and income tax and treat those that are both income taxes as one. However, that is not where we are at the moment and we have to consider what we should do with the powers that we currently have. As a Parliament, we are all going to have to compromise a bit if we are going to get a budget through this year. No one party is a majority and, as we have heard already, no one is going to get all that they put in their manifesto. However, I do think that there are some clear majorities in this Parliament and, in fact, Bill Bowman has spelt them out just now. The Conservatives are a minority in this Parliament, the Conservatives are a minority in this country, the Conservatives have support from a minority of people in the public, so it is probably the rest of the parties who are going to have to get together and have some common sense and reach an agreement that will be acceptable to the majority of people in Scotland. When we are having these debates, it is good to remember, too, that we look back to the past. On Saturday's Herald, I was reading a book called Bread for All, The Origins of the Welfare State, by Chris Renwick. I have to say I have not read the book, just the review. The review reminded us of Beveridge arguing for a welfare state in 1943 and how the top rate of income tax reached 90 per cent after the war and was still 83 per cent in the 1980s, and only fell to 40 per cent under Margaret Thatcher. I do not think that even our most left-wing colleagues are advocating either 83 or 90 per cent top rate tax, but it does show that the UK in the past has been prepared to be radical for good public services. However, there is at least one big difference between UK rates in the past and Scotland today. We have to be more concerned about behaviour change and what might happen with taxpayers at the top end, leaving Scotland or engaging in evasion or avoidance, for example through incorporation and paying themselves through dividends. The reality is that we do not know how taxpayers will react to change. Some people will be prepared to pay higher taxes in order to help the community to have better education, health and universal benefits and more investment in infrastructure. However, we accept that there are others who would seek to arrange their tax affairs in order to pay less tax. As I said in my opening remarks, I am aware of what the Scottish Government has done suggesting that there is some evidence that this might happen at the additional rate. Is the member saying that there is any evidence at all that it would happen at the higher rate? Professor Bell in the finance committee in the previous Parliament said that he reckoned that one or two pence difference would not lead to behaviour change. My advice or my suggestion would be that we consider small steps. I noticed that the member said 40 to 43, and I think that that is the kind of area that we should start with, and 41, 42, 43 and then see what happens. I would like to mention Switzerland, where I understand that the cantons have different levels of income tax, varying roughly from 17 per cent to 30 per cent with federal tax on top of that. That suggests that even a small country such as Switzerland can cope with quite wide variances in income tax between geographical areas that are not really that far apart. I accept that they have more control over taxes such as capital gains tax and gift tax, which Kate Forbes mentioned, so we have slightly different challenges. The Government has said that it is listening, and I have no reason to think that that is not the case. Last year, the Greens obtained a relatively small concession in purely monetary terms, but perhaps it was more significant in Scotland for the first time having a different income tax regime from the rest of the UK. I would love to rewrite the whole system from scratch, that will not be happening this year, and hopefully what we can do is have a discussion and negotiate and get a solution that will be acceptable to this Parliament, because I believe that that is what the Scottish public want. Thank you very much. Taxation is the price that we pay for a civilised society. The collective payment of taxes to fund the public provision of services is one that Labour is totally committed to. That system allows us to provide universal healthcare, universal education, roads and street lighting, fresh water and sanitation. It should allow us to provide good care for the elderly and dignity for those who need their help due to illness or disability. Therefore, it makes me very angry indeed when we see the debate over taxation reduced to the cynical banality of phrases such as tax grab, tax raid or tax bombshell. That plays to the lowest common denominator that seeks to make political capital, but promoting self-interest over the common good. The post-war era saw rates of wartime taxation maintained and peacetime to rebuild the country. In the 70s, we saw genuine and radical redistribution from the rich to the poor, but, of course, with every action comes a reaction. It was then that we saw the emerging dogma of neoliberalism rolled out, tested in Penish's chilli, then enthusiastically endorsed and implemented by Thatcher and Reagan, a pernicious dogma that goes against everything that I've ever believed in. If you look at some of the major events over the past few decades, you can see its grubby influence all over it. The global banking crisis, the scandal of the Panama Papers, rising child poverty, the return of diseases such as rickets, the austerity-driven cuts to services and even the rise in loneliness and isolation. It's an ideology that demands a small state that sees citizens become consumers, where services are bought or sold or bid for in a competition, where privatisation or outsourcing, as it's now being rebranded, turns services into a tradable commodity, where cuts are called now efficiencies or saving. It says that if you don't have a job, it's your own fault, not the fault of a broken system. Someone's rich because of their hard work, not the advantages that they have in their life and being poor, but that's your fault as well. Tax cuts for the rich, benefit cuts for the poor, deregulation, liberalised free markets, the law used against trade unions and, of course, all of that is driven and reinforced by institutions such as the IMF, the WTO and the EU. That brings us to the nub of the taxation issue, because if you see taxation as a burden and rises in it not as a method of paying for good things such as education, health, social care and a safe and cohesive society, you buy into that neoliberal mindset. We've heard time and again the Government demanding powers, but it's what you do once you have those powers that are important. What were the Scottish Government's big ideas for Scotland's new tax powers? Changes to redistribute wealth from the many to the few? Not at all. A bill to cut taxis on air travel to benefit the wealthiest most. On what level is that a progressive and redistributive policy? I'm happy to give way to the cabinet secretary if he can tell us how that is progressive. I don't see him moving. I think that that tells you all. Nicola Sturgeon said that increasing taxis from 45 to 50p would be daft and reckless. Derek Magai said that it would be too easy for Scots to move their wealth around, and we were told by a series of cabinet ministers that Labour's tax plans meant that people were paying for Tory austerity twice. I'm never happier than when attacking the Tory party. Let me tell you what is definitely paying for austerity twice. It's when tens of thousands of council, college, police and fire jobs have been cut due to Swinney's cuts in local government, when at times even greater than the odious Osborne. Those workers who have lost their jobs find that the various services that supported them in their communities have gone to. That's paying twice for Tory and SNP austerity. I reject outright the neoliberal notion that the Government has endorsed that paying tax is a bad thing. Public services are a good thing. I believe that they are the essential civilising services that create a good society. I remind the cabinet secretary of a timeless phrase, each according to their ability to each according to their need. That is the approach that we should have on taxation. Maybe the cabinet secretary needs to do a bit of reading. I am hopeful that our discussions on tax policy for Scotland will be constructive, and then I scored out and put waz. I think that that was during murder phraser speech, but anyway, I'll carry on regardless. I was hoping that everyone taking part in these discussions would have Scotland's economy, the health and prosperity of all Scotland's people and the quality and fairness at its heart. That's going to be my personal barometer as this discussion goes on. We should all be looking to how we can make our system fair and ensure that whatever changes we make to the current system enhances the Scottish economy and ensures that more money is made available to public services. People will not look kindly on any of us who in this chamber stand up demanding that the Government give more money to public services on the one hand, but on the other hand demand cuts for the richest in our society. That said, the Scottish public will also not look kindly on any of us who would not address the issue that I am personally a little bit wary of, and that issue is the potential for tax avoidance. The fiscal settlement that the Government has been given is right with the danger of tax avoidance being enabled. We get the tax mix wrong, and we may find ourselves in a situation where those who are able to pay more find loopholes, pretty glaringly obvious loopholes, and they change their behaviour and status in order that the tax should be raised in Scotland. It goes to our public services, ends up going elsewhere or ends up not raising any significant revenue. As it stands, there are already many individuals legally avoiding paying income tax by incorporating themselves and by paying dividends instead of a salary from which income tax can be taken. I don't think that a discussion here in the moral rights and wrong on that is helpful because it is not illegal and people are going to do it. One solution would be for co-operation tax to be devolved, as it was planned for in the devolved Government of Northern Ireland before the current political stalemate. If that devolved nation can get co-operation tax powers, why can't we? I have only got five minutes, so I am not going to take any interventions. Next is the issue of our labour market strategy and how missing fiscal powers affect that. We do not have significant levers to improve our labour market. We do have significant levers to improve our labour market, so that should mean that we can create more income for public services as a result of that increased economic activity. Increased wages could mean that our high streets and businesses are stimulated as more people have money to spend, which is great, but that increase in spending without control over VAT means that the extra VAT that is raised by the economic stimulus does not necessarily come back to the Scottish Government to put that labour market strategy in place, so we will lose out there. We cannot control the rate of VAT, which might make buying Scottish more attractive to consumers or more attractive to international trade. We also cannot do anything about national insurance as it is still reserved, so we stimulate the labour market to get more people into work through Scottish Government policies, but we gain nothing for the efforts through that particular tax. I will give you my favourite example that illustrates some of the points that I have made—one that is very current. The Scottish Government spends money in increasing free childcare. Jackie Baillie mentioned what that might cost, but the economic effects of the policy are potentially numerous. Some of them are immediate. Both parents can access the labour market without financial penalty, so they have more family income. They can afford to spend more increasing consumer spending in Scottish businesses, and one economically inactive parent becomes an income taxpayer or is able to increase working hours so that the Government gets more revenue. That more than pays for the cost of the free childcare policy. In fact, the revenue generated allows the Government to afford new labour market stimulus measures. Two weeks ago, I spoke to the convener of the Labour Market Committee of the Swedish Parliament, and we talked about those very arguments. He said to me, "'Your tax situation must be very frustrating.'" It is. For the life of me, I cannot understand why only two parties in this Parliament, in the Smith commission negotiations, asked for control of national insurance vat incorporation tax. Without those, we make our finance, labour market and economic strategies a tricky and frustrating maze when change can have unintended effects. We have got four years without an election, touchwood. Let's do the public a favour and stop trying to grab cheap headlines with the talk of people coming after their pay packet. Let's talk about making our tax system work. If, at the end of the debate, it looks like we really ought to have control of incorporation tax, vat and national insurance or whatever else, let's be united in asking for it for the good of the Scottish economy and then we can all play with a full deck of cards. Thank you, Presiding Officer. I am pleased to speak in favour of the amendment proposed by my colleague Murdo Fraser. I remind our colleagues that I am still an Aberdeen city councillor. The motion presented by the Labour Party is an interesting one. The issues of personal taxation is one of the real concern for those that we represent. Unfortunately, there is one clear and simple conclusion that can be drawn from the motion. The Labour Party fundamentally believes in increasing the taxes of some of the lowest-earning families in Scotland. They have all too quickly embraced the error that their party and others have made in the past. They see income from taxation as an inexhaustible supply of free money. They forget or choose to ignore the real impact of their proposals. In our areas, we see hard-working families in difficult circumstances. We see instances where prices rise faster than wages. Scots already have £800 less to spend compared with the rest of the UK. The Labour Party's answer is to look the families in the eye and raise their taxes, to take from those who need it the most is an application of their responsibilities. We must also address the implication in the motion that spending on public services is insufficient. We know, thanks to the research published this week by Professor Gallagher of Oxford University, that that is incorrect. We know that Scots benefit from public spending that is around £1,400 higher than in England. We know that even accounting for higher delivery costs in some areas, that spending is not providing a service that meets expectations. Scotland is already the highest-taxed area in the UK. Instead of further taxes, we should be focused on how to spend what we have in a more competent manner. On NHS, it could have been seen an extra billion pounds in funding if Scottish Government had kept pace with overall devolved spending. The SNP bangs the drum for whatever progressive policy is popular in any given week. It collects to use the levers at its disposal to make a difference to people in their lives. That is why we need real reform in the way that our public services work, to put delivery ahead of process and to spend in a responsible manner. As soon as our new fiscal arrangements receive more than 50 per cent of the money that we spend raising in Scotland, that requires us to approach public spending and taxation in a more co-ordinated and sustainable fashion. Students of economics and minus will be mindful of the optimum tax policies. Maybe you have heard of the Laffer curve, to name an academic example. It shows us that the tangible way in which an effective and densely high tax regime can depress an economy and reduce the tax take. The land and business transaction take is a classic example of that system. We've had a total reduction in income. By setting our rates too high, we discourage some of our workplace who conclude that they are better off without working or deciding to go elsewhere. In addition, businesses will choose to relocate. That is the worst possible result for Scotland. Fort of our notional deficit percentage is all over 8 per cent, being almost four times that of the United Kingdom. That should be extremely concerning to old colleagues. That does not indicate sustainable economic policy. Whether notional or tangible, the deficit has a very real effect on our ability to deliver public services, so we must not ignore it. With our present fiscal responsibilities, debt burden is carried by the UK Government. Should the debt catch up with us—and I think it probably will—I, for one, do not want to leave my children and my children's children with an unsustainable debt burden. If we as a Parliament focus our energy delivering public services in an efficient and responsible manner and increase jobs and raise wages, we will create opportunities to grow our tax base without taking from those that need it the most. The Scottish Conservatives will continue to advocate real reform in how we deliver public services and grow our economy in a way that benefits our constituents. We will continue to stand up for workers and businesses across Scotland. I am pleased to support the motor phrases amendment today. Tom Arthur, followed by Ian Gray. Thank you, Presiding Officer. I am grateful to have the opportunity and I apologise if my voice goes. I have still got over quite a heavy cold, but I think that it is probably appropriate that I am in a conversation about taxes as I sound like death. First, I want to talk a bit about the political context. I want to welcome the tenor of the offer made by the cabinet secretary to engage with all the political parties. A colleague Kate Forbes spoke about being collaborative. I think that Gillian Martin made a very important point earlier on about as much as it engendered laughter and response. I need to get out of our entrenched positions and work together collaboratively. As the cabinet secretary said, it is a Parliament of minorities. There will be a need to compromise, there will be a need for responsibility. I have just begun. If I could please, let me continue to develop my point. There will be a need to compromise, there will be a need for responsibility both with the Government and the Opposition. Equally, it is also important not to prejudice that process. It is just a beginning and I welcome the cabinet secretary's reiteration that the discussion paper will be published ahead of the budget. However, what I would like to set out is that we have to take cognisance of the economic context that we are operating within. We have seen CPI inflation in the UK up to 2.9 per cent, a joint high in the past five years. That is ahead of wage growth. That is important, because when we are talking about behavioural impacts, it is not about tax relocation potentially, it is about consumer spending and the knock-on effect that that has, too. I also want to pick up Bill Bowman, who is not in his place, who raised it. It was the issue of a constitutional uncertainty. For once, I am going to agree with him, because I think that anyone who has read, for example, the agent summary of a decision maker panel from the Bank of England on the growth of a number of businesses where Brexit is among their top two concerns, the FSB report on the small business confidence falling. A phraser of another institute saying that the immediate concern is that the exit negotiations go awry and the greatest cloud on the immediate horizon remains the Brexit negotiations. That is something that lands squarely at the feet of the Conservative Party. That makes it a very challenging environment to talk about tax because of the economic environment and the uncertainty that we are facing. That is something obviously that has been compounded with the foreign secretary's approach, who is apparently threatening to resign, although he says that the cabinet is a nest of singing birds. He seems to be the cuckoo in the nest. If we take a license of that, we can move forward in a way that is considered. Consider proposals that are based on some fundamental principles. A few points that have been made are the need to consider tax and spending. Tom Arthur, for taking the intervention. In terms of fundamental principles, do you accept the principle of increasing income tax in order to support greater investment in public services? Tom Arthur. I will address the Labour amendment specifically because it says that income tax should be increased to allow greater investment in public services. That amendment in itself begs the question. I can appreciate the prima facie when it seems that simply putting up income taxes is going to lead to greater revenue, but that is not the case. We know that with the additional rate. Again, any implications of adjusting any of the other rates can be reflected upon consumer spending. I am not prejudicing that process, but it has to be a rational, cool, level-headed conversation. It has to be detached from ideology and it has to be considered in the context of public spending. Could we stop the shouting from the sidelines, please? I think that it is a principle that we have to work at. I can appreciate what the Labour Party is at. It is an easy ask from opposition. Let's put all the bands of tax up, but there are consequences to that. There are behavioural consequences and, in the case of additional rate taxpayers, potential behavioural impacts. I am sorry, when my last 20 seconds and there is no time in hand, there is obviously the dangers of taxpayers relocating. As my colleagues have made, not having power over dividends, not having power over corporation tax, risk could lead to a net loss in revenue. There is much more that I would like to discuss, but unfortunately, time is against me. Iain Gray is followed by John McAlpine. Three years ago, I gave 10 weeks of my life to the metaphorically smoke-filled room that was the Smith commission. We agreed significant tax powers for this Parliament. Three years on, Patrick Harvie is right. It is past time that we had a Government with the gumption to use those powers for the benefit of this country, and that we do not is self-evidently true. The SNP has voted down amendments to use the tax powers of the Parliament to end austerity in the last two budgets, and they have voted against increasing tax on those who earn the most, no fewer than eight times since 2015. They have made common cause with and depended on the support of the Tories, of course. When it comes to tax, we know what the Tories stand for. They will always prioritise tax cuts for the better off over investment and services for the betterment of all. In contrast, the SNP will love to talk tough on UK taxes, whether it is a noises off from the green benches of Westminster. In this chamber today, in the cabinet secretary's opening remarks, or indeed in their motion in the business bulletin. When it comes to actually doing something progressive with Scottish taxation, there they are, rabbits in the headlights of a hard decision. Look at their motion. Derek Mackay in their motion boldly demands that we all supply him with their tax plans so that he can staple them together into a discussion document. What a weapon he is forging against inequity and inequality. What a warrior for justice he will be with his consultation on a constructed discussion paper for a framework for tax in a devolved Scotland. The truth is that we know everybody's policy on tax here except his. Mr Riley set ours out in detail, but the only tax policy that Mr Mackay has is to cut the air passenger duty and hand £200 million over to airlines and to airport operators. The truth is, Mr Mackay, that there is no consensus here on tax. You can support the Tories on tax cuts and austerity, or you can support the rest of us on progressive taxation. The question is, who is cider you on? Of course, he is not really looking for consensus, is he? He is looking for a cop-out. He is not really seeking common ground on which to stand, but rather a place to hide. That timidity in action and downright hypocrisy on tax has had consequences. Under the protection of the SNP Government, the income of Scots earning over £150,000 has soared by 68 per cent, and the number of Scottish taxpayers in that category has almost doubled, while 40,000 more Scottish children found themselves living in poverty last year alone. Or, look at the public service that the Government claims as its priority, education. As Ian Gray has mentioned, he was involved in the talks on new powers coming to Scotland. What waiting should we attach the block grant adjustment when arriving at our final tax position? Can I ask Mr Gray? Ian Gray. And yet again, another place to hide from the hard decisions of government. All too complicated for the rest of us to understand. Mr Mackay, this is a debate about the principle. The principle is, are you prepared to use progressive taxation to fund public services or are you not? It is clear that you are not. If we look at our schools, we spend £491 less per head per pupil in real terms than in 2017. 10 years ago, our teachers were amongst the best paid in the developed world, now they are paid less and worked harder than their counterparts almost anywhere else. Ministers consulted on school reforms, parents, teachers, educationalists, councillors and SNP councils queued up to say the same thing. The problem that our schools have is a lack of capacity, the problem is the cuts. Our colleges told the audit committee last week that their finances are not sustainable. In universities, two Scottish Government funding for teaching has been cut by 7.5 per cent since 2014. Ministers protest that they are spending millions on the pupil equity fund to cut the attainment gap, but they have slashed millions more from the core council budgets that support our schools. That is why our proposal for fair start funding was directly linked to that 50p tax rate, asking the rich to pay a little more to invest in helping those who need it most. Real additional investment, not robbing Peter to pay Paul and then looking for a pact in the back. This is tax and invest, because the only way to face the challenges this country faces is to invest in the skills and education of our next generation. The only way to do that is to have the guts to use those tax powers and use them now. Alex Rowley knows that I respect him as a politician of integrity and no friend of the Tories, but he is letting the Tories off the hook if he tries to pin this Parliament down to plugging the black hole of austerity in advance of the budget in November. Despite the changes made in the Scotland bill, a substantial portion of Scotland's income comes back to us in the shape of a block grant. Progressive parties in this chamber should all be working as hard as we can to put pressure on the chancellor to abandon austerity and give us the settlement that we require in that budget to fund our public services. Just as we work together— Excuse me, Ms McAlpine. Ms Lamont, could you please stop shouting from my left-hand side? It is distracting for the speaker, for me and for those who are trying to listen. We work together on the fiscal framework where the Tories tried to slash Scotland's budget by £6 billion, so I hope that we can work together to put pressure on them in the forthcoming budget in November. As has already been said, the Scottish Government's figures show a real-term cut of 9.2 per cent between 2010 and 2020 under the Tories, and looking forward, the Fraser of Allander institute last year predicted a cut of £1.6 billion between now and 2021, a real-terms cut of 6 per cent. That is why we are having this debate today and the reason why the First Minister has invited all parties to contribute their ideas to the discussion paper on tax. There have been a number of constructive contributions today, particularly by Patrick Harvie, who put forward a number of elements of the Green Party's manifesto. Of course, ideas such as those will need to be modelled so that we can see how much revenue they are likely to raise and the effect on behaviour. As the discussion pans out, we must not lose sight of the fact that those decisions have been forced on us. Indeed, there is a significant body of opinion, no thank you, which believes that this was always the Tories' intention to cut this Parliament's budget in order to force us into raising income tax, which they will then condemn a trap. In other words, back in 2015, David Cameron, the Prime Minister at the time, was completely transparent about his intentions when he spoke to the House of Commons about how the income tax powers in the Scotland Bill. He said, and I quote, I want the SNP here and in Holyrood to start making decisions which taxes are you going to raise and what are you going to do with benefits. Although the Tories here repeatedly bleat against proposed tax rises, one cannot help but to suspect that it is all part of the grand design to undermine confidence in this Parliament and devolution itself, no thank you, to cut Holyrood's budget, because that is what happens when you limit the amount of taxes raised to a very small number of taxes of which income tax is the most substantial. It means that the finance secretary has very little power to manoeuvre. I remind members of some of the contributions in the committee of eminent economists, such as Andrew Hughes, who said that he really needs a basket of taxes in order to be able to manage the economy with maximum efficiency, which is something that Professor Gallacher, who was quoted earlier and who was the secretary to the Kalman commission, as I recall, set himself against and was always very much opposed to. Make no mistake, Presiding Officer, what we're doing here is looking at preserving better public services in Scotland and the better outcomes that we have experienced in Scotland because we've made different choices here. NHS spending in Scotland is higher per head in England, 1470 compared to 1266. Staffing in the NHS in Scotland under the SNP will have 12,000 more staff and again more per head, 25.9 per 1,000 population in Scotland compared to 19 per 1,000 population in England. Of course, in England, students face tuition fees of 9,000 plus a year and the educational maintenance allowance for low-income pupils in England has been abolished whereas in Scotland it has been retained and expanded. In England, 19,000 police officers have been cut and in Scotland we have appointed 1,000 more officers. I could go on and talk about the no compulsory redundancy policy, which the SNP Government put in place at an early stage. The £400 million was spent mitigating welfare cuts and introducing aspects of the social wage, such as free prescriptions. That's why Scotland is a country worth living in and a Scotland that puts fairness first. If we want to preserve those advances, we need to have this debate and we need to model different tax ideas to see how much revenue they raise when behaviours are taken into account. In conclusion, the Tories are saying today that they want us to mimic their Westminster counterparts on both tax and cuts, but we won't be doing that and that's why I welcome the discussion. The last of the open debate speeches is Alison Harris. The Labour Party, by coming to the chamber today and telling us that they want to increase the tax burden on 2.5 million hardworking Scots and their families, have clearly set out their stall. A return to high tax and high spending that has clearly been rejected by the Scottish voters. From John Swinney's 1999 proposal to increase income tax by £1, which voters roundly rejected, to Labour-promising tax rises in their 2016 Scottish manifesto, proposals that contributed to their worst Holyrood result. However, by 2016, even Mr Swinney was highlighting what we on this side of the chamber knew already. Referring to the Labour proposal, he said, this is a tax change that would have a detrimental effect on the incomes of low-income households. While those are words from the Deputy First Minister, with which we can wholeheartedly agree, we are concerned that in this chamber only a few short weeks ago the First Minister refused to affirm her party's manifesto commitment to freezing the basic rate of tax. It seems that we may well be seeing the start of yet another competition among other parties in this chamber to take more and more tax from the pockets of Scottish workers. I am proud that this is a race that the Scottish Conservatives will not be entering. Instead, we shall continue to stand on the side of Scottish families and Scottish business. The SNP and the Greens have already made Scotland the highest tax part of the UK and on the highest tax part. Derek Mackay Does the member, Alison Harris, say that Fraser of Allander Institute got it wrong when, on 10 April 2017, it confirmed that Scotland was not the highest tax part of the UK? If you look at all taxes in the round. Today we are talking about income tax and where income tax is concerned, we are the highest tax part of the UK. The SNP and the Greens have already made Scotland the highest tax part of the UK and for any further attempt to make Scots pay more than people in the rest of the country is still as unpopular as ever. The concern over higher taxes goes well beyond individuals. The Scottish Chambers of Commerce has said that— Mr Arthur, would you stop muttering from your seat please? Carry on, Ms Harris. Thank you. The concern over higher taxes goes well beyond individuals. The Scottish Chambers of Commerce has said that higher taxes north of the border would set a dangerous precedent and that growing our economy, rather than increasing taxes, will provide the most sustainable route towards boosting tax revenues and thus public spending. Lest money in people's pockets clearly will come at a price in terms of jobs and growth. The Institutes of Directors has said that raising income tax would send the wrong message and David Longsdale, director of the Scottish Retail Consortium, has said that the Scottish Government should keep income tax rates down, boosting customer confidence and keeping consumer spending buoyant to support the economy as well as government spending. Deputy Presiding Officer, as well as supporting the need for working families to keep more of their own money, I wish to turn now to say more about Scotland's small business sector. Almost 70 per cent of the country's 350,000 private sector businesses are unincorporated and paying personal taxes. Many of those people work long and hard to develop their businesses. Many of those small enterprises are in sectors ranging from agriculture to tourism and they are struggling. The last thing that small business wants to see is the added burden of an increase in personal taxes. What a disincentive to work the long hours to provide both the service and to create the wealth that generates further employment. One of my constituents put it, I can understand the need to tax things that are bad for you such as alcohol and cigarettes, but why do some politicians want to constantly increase the tax on work? In the small business survey carried out on behalf of the Scottish Government earlier this year, it is interesting that the top three obstacles given by the SMEs to the success of a business were competition in the market, red tape and regulations and then taxation. Growing the economy is key to our economic success and keeping taxes low is a major component in achieving growth. I am delighted that with this amendment—no, I have no time now, I am sorry. I am delighted that with this amendment the Scottish Conservatives are yet again signalling that we are on the side of those who would be hit by the tax proposals put forward by other parties. The Scottish Conservatives are with those struggling to grow a business. We will never cease sending out the message that increased taxes disincentivises work and, therefore, growth. That can be seen with the LBTT. This is an example that showed us that increased taxes can actually reduce anticipated tax take. I am delighted to support the Conservative amendment this afternoon. We now move on to the closing speeches. It is disappointing to note that not everyone who contributed is back in their seats. I call on Willie Rennie for up to six minutes, please. Thank you, Deputy Presiding Officer. I was intrigued by what Derek Mackay said. No, it was not his opening speech, which was the intervention to Ian Gray, where he talked about the block grant adjustment and whether our tax proposal should reflect the consequences of the block grant adjustment. He has clearly reached some kind of conclusion on some kind of... If it comes to the conspiracies, all we need to listen to is John McAlpine, who believes that all the unionist parties have set up this Parliament so that we can do down Scotland. That is exactly why we have done it. I will not take anything about conspiracy theories, but it was interesting. That is a very serious point, because I think that he should elaborate in his summing up. He has obviously reached some kind of conclusion. I will take an intervention if he can elaborate now. Derek Mackay. I suppose to assist Willie Rennie and other members of the chamber. The fiscal framework has a block grant adjustment, which does actually relate to how much tax we accrue to Scotland is relative to the tax decisions in the United Kingdom, so I happen to think that it is important that the members understand that when they set out their tax positions. Willie Rennie. That is great, because that is more than we got in Derek Mackay's opening remarks, which was a generality about partnership. It is important for Derek Mackay to try to set out some of the substance on that, because he has the support of all his officials behind him to help him to work his way through the fiscal framework. Let us see what kind of conclusions he has reached already, or otherwise, he would not have made that intervention to Ian Gray, so I am intrigued by that little remark at one point. The fact that Derek Mackay is protesting so much probably proves the point that I have actually hit on the mark. That is actually a healthy debate. We have often, for many, many years in this Parliament, debated how to spend the extra money, or the less money, that we had from Westminster, but now we have the responsibility to also consider the impact on taxpayers. I think that that has made this a much more rounded Parliament, one that is considering the impact on people's spending, as well as Government spending, too, so I think that it has improved the nature of the debates in this chamber. Although I did not think that it was assisted by Thomas Mason, who talked about the level of debt, because we are not talking about increasing borrowing here, we are talking about potentially increasing taxation living within our means, but actually increasing taxation in order to be able to spend on public services. I did not quite understand why he was bringing that remark into it, and neither did I really appreciate the remarks from Bill Bowman. I thought that Bill Bowman described tax as pic-pocketing. I do not regard saving people's lives in hospitals as pic-pocketing. I do not regard educating children in our schools as pic-pocketing. I think that taxation can be a force for good to change people's lives and to describe it in that emotive way. I do not think that it helps the debate in this chamber. He also described us as part of the left-wing consensus. I do not remember describing us as that when we were in this coalition with him before, but let us forget that fact too. I was interested in John Mason's remarks. I thought that it was a good contribution about more radical proposals. I would quite like to see exactly what he means in the detail of that. I think that Tom Arthur talked about both sides of the balance sheet being considered, which is a point that I have just referred to as well. Ian Gray made a great contribution talking about the time that he spent in the Smith commission. Since 2007, the SNP Government was able, to some degree, to complain about other decisions by UK Governments and the impact on public spending in Scotland, with the inability to have the flexibility to do something else. However, Smith gave that flexibility. It has given that flexibility since 2015-16, so we have the ability to do things differently. What is disappointing is that the first decision that we made in this panel was to do exactly the same as we have done before, irrespective of the powers that we have now got. That is regrettable, but to be on the upside, it is positive that Dennett Mackay is now embracing the potential only for something different for Scotland. It is an opportunity to look forward. Therefore, I was disappointed that Kate Forbes and Gillian Martin did hark back to that old debate that I thought we had put behind us for a little while, at least, about the argument about what powers we should have in this place rather than using the powers that we have just now. In the particular argument about corporation tax, it was interesting, because both took opposing positions on that. One said that we could never cut it, and the other said that we possibly could. Both seemed to be in contradiction to Alex Salmond, who just wanted to slash it right down to Irish levels. We have a multitude of different positions on that. However, the interesting point—not just now—was on the personal allowance that Kate Forbes, in particular, wanted the personal allowance to come to Scotland. We have the ability here to create a zero-band, to raise the personal allowance higher than the threshold that it is just now. The only purpose for what, in control of the personal allowance, would be to lower it, to take it down—I am finishing this point—to take it down to a lower level, to increase tax on the lowest level or something that I worked really hard to change, to take people out of tax altogether. I think that it was astonishing that that was one of the proposals that they would want to bring back to this Parliament, because it could only mean higher taxes for the poor. One final point. There is a rumour going around that the Government is going to abstain on the Labour motion today. We are going to abstain. That would be— You must close, please, Mr Rennie. We need some clarity on exactly what the Government is proposing to do today, because what it should do is embrace the opportunity to do something different in that Parliament. I now call Patrick Harvie up to six minutes, please. Thank you very much, Deputy Presiding Officer. We have managed to avoid reaching the level of a stairheed rami. We have not quite been that bad, but I suspect that over the coming months, if the Government is remotely serious about having a discussion about shifting its own position, I suspect that it will be those who positively set out a constructive case for change rather than just those who insult their opponent's track record who might see some progress made. I was pleased that Willie Rennie, whom I would never flatter by calling part of the left-wing consensus, was pleased that he was so grateful for the reminder of green policy in my opening position. I am sure that anyone who heard a note of sarcasm in his voice must have been mistaken, given that he went on to criticise the lack of detail from other parties. However, given that he is not a fan of interventions, I have still not had the opportunity to find out from the Liberal Democrats if they are open to the idea of splitting the basic rates so that we do not have to increase taxes on lower-than-average earners. The idea of a zero rate simply will be one more way of spreading that tax cut to everybody right up to the additional rate threshold. That is not a socially just way of reducing the tax burden. I am surprised as well a little bit about the Conservatives, because it seems to me that there ought to be some kind of point of common ground from the Conservatives looking at the green proposals on taxation, because they are the only proposals that have been advanced so far that would cut the tax bill for the majority of households in Scotland. Taken by our income tax, our local council tax and our NDR proposals in the round, we would be cutting the tax burden not on the wealthiest as the UK Government has, but on the lowest-income part of our society, and the majority of households would be paying less tax. The Conservative position at the moment seems to be based on magical thinking. Cut every tax going, cut ADT, cut income tax, cut taxes on business and still keep spending more across the board. If there is anybody who believes in the magic money tree, it is the Conservative party. Murdo Fraser came toward the end of his speech saying that we are in the same position as we were in 2007. Whatever point he was trying to make about the public finances, people are not in the same position that they were in in 2007. A huge number of people have seen the real terms, value of their wages go down and down and down in the public sector and the private sector. The impact of taxation on them is deeply regressive. If we look at the combination of income tax and indirect taxation, it is the poorest fifth of our population who are paying the highest tax burden, the highest share of their income in overall taxation at 38 per cent, higher than any other section of the population. We have a deeply regressive approach to tax at the moment. There is one point of common ground that I had with the Conservatives, in that there is not yet clarity from the SNP on their position. I agree with that point. I do not expect a fully developed proposition from the SNP at this point in what is supposed to be an open discussion. After all, I want opposition parties to have the chance to push them beyond their comfort zone in the right direction. Digging heels in is not the right way to start. However, I think that the SNP should have begun the discussion by setting out some clear principles. One, that increased demands on public services require increased overall revenue. Two, that that must be done in a way that reduces inequality in our society. If we began the conversation with agreement at least across most of the political parties on those key principles, we would have a much stronger basis for moving forward. As far as the Greens are concerned, that must mean restoring the lost value in public sector pay. I note that Unison's view, published last week, is that a 5 per cent increase for inflation is justified, so an above inflation increase for public sector workers to begin to restore some of the lost real terms value. If we had the two key principles at the start of the conversation, and if the SNP even today is able to agree to those two principles, I would welcome it, it would never lead us, for example, to Gillian Martin's demands for the freedom to cut corporation tax even more deeply than the UK has done at a time when many corporates are still using tax havens or other tax dodges. Gillian Martin, Mr Harvey, with all due respect, I never, ever said anything about what I would cut and what I wouldn't cut. Every one of the positions, what I was merely saying is that if we had the powers for all these tax, we would be able to have a full deck of cards with which to play. Patrick Harvie. The SNP's position in the past has been to devolve corporation tax in order to cut it, and that absolutely needs to be rejected. I would agree to this extent with Gillian Martin and Kate Forbes that it would lead us to a discussion about the wider approach to taxation, not just on income tax. Kate Forbes framed that entirely as a complaint about the constraints that exist. What we need to do is recognise that we have always, since 1999, had unfettered power to levy taxes for local services. Local taxation has been constrained only by the political paralysis in this Parliament. The unwillingness to move, to reform and to replace both council tax and non-domestic rates with something fairer and more progressive. We will oppose the Government's amendment just as we will continue to oppose their regressive position on ADT, and in the long run we will continue to argue for a shift for our taxation away from income and toward the wealth inequalities that are even more grotesque in our society than income inequality. It's been an interesting and, at times, even entertaining debate this afternoon. On the side of the chamber, we've been watching the other parties clambering over each other to declare their high-tax left-wing credentials. From Labour, we've heard from the Corbynites, they want to increase tax for everyone, and from the SNP, we've heard from the Corbynites. We all know they want to increase tax, but they won't come off the fence and admit it. That's what's been remarkable about this debate. Every party, except the Government, has explained their income tax policy. Alex Rowley made it clear that Labour wants to increase income tax for everyone, earning over £11,500. That's a tax increase for over two and a half million people in Scotland, and to raise the top rate to £0.50. For the Greens and Liberals, Patrick Harvie and Willie Rennie, I will later, Patrick Harvie and Willie Rennie confirmed that they are also part of the high-tax bonanza. As for the SNP, instead of debating its income tax policy in the chamber, the SNP tells us that it wants to have an informed discussion. There we have it just two weeks after the SNP published its programme for government, promising a bold and ambitious vision for a modern dynamic economy. We discover from the SNP that this Government does not in fact have an income tax policy. We really shouldn't be surprised. The SNP has shown this level of confusion before on tax. After all, it is the party who wants to cut air departure tax, because it will boost the economy, and which has repeatedly warned against increasing the top rate of tax. In the words of the First Minister, as Bill Bowman highlighted, it would be reckless and would be daft to do so. However, at the same time, it is also the party that has increased land and buildings transaction tax, causing a loss in revenues of over £800 million. The same party that, two weeks ago, in the programme for government called for the innovators of the world to come to Scotland—only now to tell them that they will be taxed more in Scotland than elsewhere in the UK. Our amendment to the Labour motion reflects the fiscal reality that higher income tax in Scotland will not deliver more funding and will not deliver more investment for public services. I will later explain the reasons why higher tax will not result in higher tax revenues. Under the fiscal framework agreed by the SNP, the level of public spending available in Scotland will be directly linked to the performance of the Scottish economy relative to the UK economy. We found out today from the Fraser of Allander that the underperformance of the Scottish economy is forecast to underperform the rest of the UK for years to come. The same report also highlights that consumer confidence in Scotland remains negative and lower than the rest of the UK. The earnings and disposable income in Scotland continue to fall, leading to negative multiplier effects in the economy. High tax or higher tax will only make this situation worse. Can I say it is up to the member whether or not they take an intervention and when they take an intervention? I am sorry, Presiding Officer, and I appreciate Dean Lockhart taking the intervention. I ask Dean Lockhart if he agrees with the Scotland Office that the UK Government is responsible for the Scottish economy. There is a long answer to that. The UK economy is responsible for monetary policy with record low interest rates and record low mortgage rates under the UK Government. However, the Scottish Government is responsible for enterprise policy and growing that part of the economy. For the 10 years under the SNP, the Scottish economy has underperformed the rest of the UK with the same parameters. Instead of listening to the failed left-wing consensus, as Alison Harris said, and Willie Rennie might be part of that, we should listen to the experts. For example, the Scottish Chambers of Commerce has made it clear that growing the Scottish economy and not squeezing the last drops out of workers will generate more tax revenues. Another negative consequence of increasing tax will be behavioural change that we have heard in other debates. It would only take 1,000 top-rate taxpayers to transfer their tax base out of Scotland for there to be a decline in overall tax revenues. That was recognised by Kezia Dugdale when she said that raising the top rate of tax to 50 per cent could, in her words, raise zero because of the mechanisms by which people can avoid paying tax. Those concerns were raised in the economy committee yesterday when we heard that taxpayers' additional rate, as well as higher rate, could incorporate and take their income streams out of the Scottish tax system altogether, something that a higher rate compared to the rest of the time—something that a higher rate in Scotland would encourage. As a number of members have said, tax policy does not operate in isolation, we agree. It is therefore incumbent on all parties to recognise the reality that we are in tax competition with the rest of the UK as well as the rest of the world. For those reasons, our amendment to the motion today makes our policy position clear. There is no case for raising income tax rates in Scotland above those payable elsewhere in the UK and that to provide reassurance to the lowest paid, a rise in the basic rate of income tax should be immediately ruled out. On this basis, we look forward to hearing the finance secretary in his closing remarks whether or not he is willing to confirm the pledge that was made in the SNP Hollywood manifesto last year when it said that it would freeze the basic rate of income tax throughout the next parliamentary session to protect those on low and middle incomes. The hard-working people of Scotland deserve an answer. I call Derek Mackay. Absolutely no more than seven minutes, please, cabinet secretary. Okay, thank you, Presiding Officer. I can hear Johann Lamont disappointed that it's only seven minutes that you'll get to hear from me for. First of all, over the course of last year's budget, where this Government approved over £900 million of extra expenditure on Scotland's public services, there was a cry from the other political parties to listen to them on tax, to listen closely to their position on tax. Now there's a united outcry from some of the opposition parties that I'm listening to them on tax. How dare the Scottish Government enter into a well-informed debate about tax in this country? Willie Rennie asked very important questions about the context of that debate and that discussion paper. The reason, if I can finish this point, I think that it's important to add confidence to the discussion paper is so that every political party can appreciate what I'm trying to do is fairly model their propositions. Incidentally, it will be the chief economist, so it's up to you how much you trust the chief economic adviser of Scotland to do those calculations, to inform that paper and that debate, which will present all policies fairly and equally. I think that that will be a very helpful intervention. I heard one member in the chamber say, why are you bothering with all this modelling of propositions? It's actually quite important if you're about to make a tax proposition that you know in fairness what it means in terms of the revenue that it would raise and also what impact it might have on our society so that it should be an evidence-based paper understanding the propositions put by the political parties in a fair way. I had committed to taking an intervention from Johann Lamont. Johann Lamont, thank you very much. Do you wonder if the cabinet secretary confirmed in saying that he's now willing to enter into a fair debate on taxation that the debate before that was not fair, that it concluded with the idea that taxation was taking money from the poorest when, in fact, we know that progressive taxation will benefit through public spending, creation of jobs and social and economic opportunity. Will he now apologise for the way in which he characterised taxation policy before and enter a serious debate about the need for progressive taxation? The problem for the Labour Party is that last year we had a serious debate on how to use our powers, how to use them responsibly, how to invest in our public services and how to give stability to our economy. Tax powers are not a toy set that you play with. You use them in such a way as to raise the revenue to spend on our public services, but also in a way that is concurrent with the King's Scotland that we seek and can support business growth as well. I made the point in last year's budget that we committed to and are delivering over £900 million worth of extra investment in this country in the teeth of opposition from the Labour Party and the Tory Party as it happens. I listened carefully to what the Labour Party said and I would like to make more progress, and I listened carefully to what the Labour Party said in outlining their tax position, which, yes, did include raising the basic rate. I am completely unaware of the people that that would reach, but I appreciate that the Labour Party has put forward the position. We have been in office for 10 years. I think that Labour, including its interim, leads us on to that. Excuse me, cabinet secretary. Can we have a bit of parliamentary respect, please, from those who are continuing to shout from their seats? Cabinet secretary. I respect the position of the Labour Party, but I am left wondering which Labour leader is that I have to go to to get the tax policies to model to be able to inform this debate. I have tried to stress the importance of the block grant adjustment, because it matters the relationship between tax in the UK and tax in Scotland. To ensure that we raise the revenue that is required, the Lib Dems have set out a position. It may well be viewed as a tax and spend commitment. It may well be viewed as ring fencing for education, but I can assure the Lib Dems that, if they engage positively, it will at least be a well-informed debate in which we will have choices to make, and that is absolutely constructive. The position from the Conservatives, I want to intervene to expand upon to see whether it is still the position of the Conservatives to reduce tax for land and build and transaction tax, higher value homes, whether it is still the position to reduce it for council tax, whether it is still the position to reduce it for large business supplement as well. Sticking to the theme from the Tories that they will only protect the richest in society, which is exactly why I want the Tories proposition to fairly model what that actually means and have a fair debate. In terms—not right now, I have very little time left, because a number of members have fairly asked about the position of the Government, but I said in my opening remarks that if the SNP simply produces our manifesto commitment and puts it to the chamber, we will not win, because this is a Parliament of minorities, and that is exactly the reason why we should engage in a well-informed, evidence-based debate on what powers we have and how they could be used in a reasonable and responsible way. I give way to Patrick Harvie. Patrick Harvie. I am grateful that the cabinet secretary earlier made an important point about the modelling he expects to be done by his officials of the proposals that come from other parties. Can he confirm that that modelling will not only look at the revenue to be raised but will also look at the impact on income inequality in our society and test each party's proposition, including his own proposition, against that as a principal objective? Derek Mackay, final minute. Yes, I do believe that that is a fair contribution to a well-informed debate as to how we should use our tax powers. If we want to have a well-informed debate, we have to understand the basics. That is why I am so surprised that many members in the chamber did not appreciate the importance of the block grant adjustment and did not appreciate the importance of where wealth is in this country and why other powers actually matter in that regard. I want to return to something that Alex Rowley said, which it was. He accepted that this could be a well-informed, rational debate and we should engage in it in that spirit. Of course, many of the colleagues sitting behind him said why the need for tackling Westminster. I need to return to this point that we still have an opportunity before the UK Government and the UK Chancellor sets his budget to oppose the DOJD-U appeal, to oppose austerity, to have a proper approach on public sector pay and we must not give up on that battle as we approach our own budget and our own tax decisions, but I will continue to take decisions responsibly and reasonably and offer them. The other party has that opportunity to engage in this so that we can have a debate on income tax that we can be proud of. Deputy Presiding Officer, I welcome the opportunity to close this afternoon's debate, which has been a very important debate because it has allowed the parties to set out the parameters of their tax policies ahead of the publication of the draft budget, which comes later in the year. That is important because what we raise in taxes and what we set the budget at has a direct impact on the services that we provide to our communities and our ability to grow Scotland's economy. It has been a very good debate in the sense that we have heard from most of the parties what their position is. The Tories have set out a position of no income tax rises. Willie Rennie has advocated a long-held position of using a penny income tax to support investment in education. Patrick Harvie has laid out using different rates to raise taxes. What has been disappointing in that is that the Government has essentially sat on the fence in terms of what their position is. What the Labour Party is trying to do in the debate is to set a situation in which we agree that we will raise income tax in order to produce greater investment in public services. The SNP has backed out from answering that question today. It is an important question when you look at the landscape of public services in Scotland. Take the NHS for example. 300 operations cancelled in July. I had a constituent come to me last week that is going to take 21 months from first diagnosed to when he will be able to get a hip replacement. That is totally unacceptable. In education, we heard Alec Rowley outline the position of 4,000 less teachers. That has a direct impact, as we saw last week when the head teacher of Trinity academy wrote out, asking for volunteers to fill up the gaps in the teaching resource in that school. That is not the first time that that has happened. Then you look at the position in councils, 7,000 jobs lost in 2015-16 alone, as the SNP Government piles on the public spending cuts towards Scotland communities. It is just not on, Presiding Officer. There is a real issue about the fairness aspect of the taxation policies being pursued by the SNP Government. As Ian Gray pointed out, millionaires are only paying £2 more in tax per week. As Neil Findlay pointed out, the proposed reduction in ADT will result in not only in taking £190 million out of the Scottish budget, but, as the think tank fellow travellers pointed out, those who will benefit will be the top 10% of taxpayers, while the bottom 10% of taxpayers suffer a disadvantage. There is a lack of fairness around those taxation policies being produced and being looked at by the SNP. John McAlpine, please explain to me why Labour councils have not taken the opportunity that they have to raise council tax to meet some of the challenges that he describes. Councils all across Scotland have faced £170 million cumulative cuts because of the votes of the SNP benches here today. The reality is that Derek Mackay tells us that he wants a debate about taxation. He has got an army full of civil servants and yet he is asking the other political parties to come up with their suggestions on taxation. It comes down to give your answers on a postcard, please, to Derek Mackay, care of St Andrew's house. One of the disappointing aspects of that is that when Derek Mackay comes to publish the modelling, he comes to look at the modelling that he has been discussing this afternoon. One of the last times that the Scottish Government produced and had modelling on local income tax, it went to court to stop the publication of it. When we see the modelling coming out, let us publish it in lots of full transparency. What we need is an open and honest debate and what we heard from the SNP benches was a litany of excuses as to how they could not face up to the issue of taking an honest position on taxation. In terms of the Tories, they clearly take a position of not supporting income tax rises and I think that that is rooted in a belief that they would quite gladly cut taxes back to the bare minimum because they are not particularly interested in investing in the public sector. They see that the public sector is something of a handicap and that underpins their whole ideology. I also think that their argument is flawed in terms of taxation not equal in economic growth. If you look at the recent survey produced by Technology Scotland, it makes the point that there is a skills gap in Scotland and that we need to address that. I genuinely argue that the way to do that is to invest more in schools and colleges to ensure that we get more information technology and engineering graduates out of those colleges and universities in order to fill the skills gap and to raise more taxation to promote economic growth. In summing up, Presiding Officer, this is not only a debate about taxation, it is a debate about what sort of country we want Scotland to be. If we really want to see a more passionate and a more dignified country, we need to be prepared to make that investment in services and raise the taxation to make the difference. If we want to treat our old people with dignity, if we want to see our youngsters have the opportunities to graduate from college and university and earn decent wages and if we want to address the housing crisis, we need to face up to the decisions that are required for that. Support the Labour motion at 5 o'clock. Let's invest in our public services and raise the taxation to make that happen. That concludes our debate on finance. The next item of business is consideration of two business motions. Motion 7778 setting out a business programme and motion 7779 on an extension to a stage 1 timetable. I would ask anyone who objects to say so now. I call on Jovis Patrick on behalf of the parliamentary bureau to move both motions. Formally moved. Thank you very much. No one has asked to speak against the motions, therefore the question is that motions 7778 and 7779 be agreed. Are we agreed? Thank you very much. The next item of business is consideration of parliamentary bureau motion 77780 on designation of a lead committee. I would ask Jovis Patrick on behalf of the bureau to move the motion. We turn now to decision time. I would remind members that if the amendment in the name of Derek Mackay is agreed, then all the other amendments would fall. The first question is that amendment 77750.4, in the name of Derek Mackay, which seeks to amend motion 77750 in the name of Alec Rowley, be agreed. Are we all agreed? We're not agreed. We'll move to our division and members because the vote's now. The result of the vote on amendment 77750.4 in the name of Derek Mackay is yes, 61, no 63. There were no abstentions. The amendment is therefore not agreed. I would remind members that if the amendment in the name of Murdo Fraser is agreed, then the subsequent amendments would fall. The question is that amendment 77750, in the name of Murdo Fraser, which seeks to amend the motion in the name of Alec Rowley on finance, are well agreed. We're not agreed. We'll move to our vote and members because the vote's now. The result of the vote on amendment 77750.1 in the name of Murdo Fraser is yes, 30, no 94. There were no abstentions. The amendment is therefore not agreed. I would remind members that if the amendment in the name of Patrick Harvie is agreed, then the amendment in the name of Willie Rennie would fall. The question is that amendment 77750.3 in the name of Patrick Harvie, which seeks to amend the motion in the name of Alec Rowley, be agreed. Are we all agreed? We're not agreed. We'll move to our division and members because the vote's now. The result of the vote on amendment 77750.3 in the name of Patrick Harvie is yes, 6, no 58. There were 60 abstentions and the amendment is therefore not agreed. The next question is the amendment 77750.2 in the name of Willie Rennie, which seeks to amend the motion in the name of Alec Rowley, be agreed. Are we all agreed? Yes. We're not agreed. We'll move to our division and members because the vote's now. The result of the vote on amendment 77750.2 in the name of Willie Rennie is yes, 6, no 59. Abstentions 60. The amendment is therefore not agreed. The next question is that motion 77750 in the name of Alec Rowley, on finance, be agreed. Are we all agreed? Yes. We're not agreed. We'll move to our vote and members because the vote's now. The result of the vote on motion 77750 in the name of Alec Rowley is yes, 33. No, 30. There were 61 abstentions. The motion is therefore agreed. The final question is that motion 77780 in the name of Joe Fitzpatrick, on designation of a lead committee, be agreed. Are we all agreed? Yes. We are agreed. And that concludes decision time. We'll move to members' business in the name of Linda Fabiani on fighting for tax jobs and tax justice. We'll just take a few moments to change seats.