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Scottish Rate Resolution

Part of the debate – in the Scottish Parliament on 4th March 2020.

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Photo of Ben Macpherson Ben Macpherson Scottish National Party

I thank Patrick Harvie for raising that important point. I enjoyed taking part in those discussions for the first time with him and colleagues last week. The undertaking that we gave in last year’s budget process looks forward to further constructive discussions—they are very important discussions.

As well as the list that I gave of just some of the benefits that our income tax commitments, and the revenue that will be raised, will allow us to provide—and have allowed us to provide—it is important to emphasise, and for members to remember, that we also have to spend £110 million to mitigate the impact of UK Government welfare reforms.

I will deal with a point that was raised by members on the Conservative front bench. They made the erroneous analysis that the income tax situation in Scotland has a behavioural change impact in relation to Scotland’s attractiveness. I point out to the Conservatives that Scotland has a very strong reputation and record on attracting inward investment and that net migration from outwith and, crucially, within the UK, is positive. More people come from the rest of the UK to Scotland than go to the rest of the UK from Scotland, in large part because of the high quality of public services and the socially just, progressive and competitive economy that we are building. The biggest threat to Scotland’s attractiveness is the Conservative UK Government’s immigration proposals. There was, to use Alexander Burnett’s phrase, a significant “brain drain” from Scotland during the 1980s, and we know who was in government at Westminster at that point—the Conservative Party, whose policies had a really negative effect on Scotland’s economy and society.

Some important points have been made about the quality of our debate on this issue and the need for us to be nuanced. Tom Arthur made a fine contribution on those points, as did a number of others. Members also set income tax consideration and policy within the wider scenario, including its relationship with national insurance, which John Mason talked about, and with dividend income tax and savings income tax. We need to consider all of that, as well as employment law, welfare policy, immigration policy and the suite of taxes that are reserved, when we reach decisions on what rates to set. That has been important thus far and is important today. Since 2016, we have had the ability to set income tax rates, and we have had to do so responsibly and progressively, basing decisions on principle and logic, and responding to matters that are beyond our control—externalities such as, most prominently, Brexit.

Today is our opportunity to use the limited powers of this Parliament as best and as responsibly as we can to continue to build a fairer and more progressive country. It is important to emphasise that, contrary to what some members might say, in terms of income tax, Scotland remains the lowest-taxed part of the UK for the third consecutive year.

The proposals that were put forward today mean that, in 2020-21, 56 per cent of Scottish income tax payers will pay less income tax than if they lived elsewhere in the UK. No Scottish income tax payer will pay more income tax next year on their current income than they do now. Our budget sets out tax plans to protect the lowest-earning and middle-earning taxpayers and make the tax system fairer and more progressive.

As I said in my opening speech, we have chosen to freeze the higher-rate threshold in 2020-21, which the independent Scottish Fiscal Commission has forecast will raise £51 million next year for investment in public services. Not doing that would mean that there would be £51 million less to support our vital public services, invest in our economy, tackle climate change and meet our ambitious child poverty targets. We have asked those who can most afford it to pay a bit more, meaning that we can deliver a wider and better-funded set of free-to-access public services—services that are not available elsewhere in the UK.

I could say a lot more. I am thankful to members for taking part in this important debate. We in the Scottish Government take seriously the responsibility of Government to create, with the powers that we have, a tax system that is right for Scotland, its people, its businesses and the economy. I ask Parliament to share in that responsibility and agree to the Scottish rate resolution.