3. To ask the Scottish Government what its response is to the latest data reportedly showing that a majority of Scottish taxpayers now pay higher income tax than those elsewhere in the United Kingdom. (S6O-02270)

According to the Scottish Fiscal Commission’s December forecasts, 52 per cent of Scottish taxpayers will pay slightly less income tax in 2023-24 than they would if they lived elsewhere in the UK. That will have been the case for the sixth consecutive year. The commission will publish updated forecasts, which will incorporate the latest economic data, alongside the medium-term financial strategy tomorrow.

We have always prioritised a fair and progressive approach to taxation that balances the need to raise revenue with the impact on households and the economy. That approach has resulted in additional revenue from income tax being raised for the Scottish budget, with lower earners protected from higher taxes.

I thank the cabinet secretary for her response, but I fear that the data that she cited from the Fiscal Commission is now out of date, given that the most recent data shows that anyone who earns more than £27,850—the majority of Scots—is now paying more tax than they would if they lived elsewhere in the UK.

I commend to the cabinet secretary a very interesting article in today’s

Herald by her former ministerial colleague Ivan McKee, who is, of course, now a member of the Government in waiting on the back benches. In the article, he argues for the Scottish Government to make Scotland a more attractive place for workers to come to from other parts of the United Kingdom. I think that we all agree with that, but we all hear the difficulties of the business community, particularly those in sectors such as finance, in encouraging people to come here because of differential tax rates. How can we attract more people to come and work here if they feel that they will be punished with higher taxes to make up for Scottish National Party waste and financial mismanagement?

Each year, we publish the distributional analysis of our income tax policy in order to transparently set out the impacts. That analysis is there for everyone to see. The median wage for 2023-24 that is used in that analysis is, of course, derived from independent forecasts from the Scottish Fiscal Commission.

It is clear from analysis by the Institute for Fiscal Studies that households with children in approximately the bottom third of the income distribution in Scotland will gain about £1,200 per year as a result of our tax and social security policies.

At the end of the day, this is all about choices. Had we followed the choices of Murdo Fraser, who backed Liz Truss, and emulated her tax-cutting policies, we would have had hundreds of millions of pounds less available for public spending, as he knows.

On Murdo Fraser’s final point, Scotland continues to have consistently positive net inward migration from the rest of the UK. Those are the facts, which stand in contrast to his earlier assertions.

We will continue to ensure that we balance the needs of households with the needs of public services. Through the summer, I will engage with people from a range of organisations in order to ensure that we listen to their views as we go towards setting the tax policy for next year’s budget.

I am, of course, happy to engage with any suggestions from Murdo Fraser or his colleagues. However, the budget has to balance. As the member knows, many of his colleagues come here and ask for more money, but any tax policies that the Tories put forward have to balance with the availability of resources for public spending.

The Deputy Presiding Officer:

I will need a bit more brevity in responses as well as in questions.

It appears that, for the Conservatives, the ideal world would have no tax, no schools, no hospitals and no roads. Does the cabinet secretary agree that if we want all those things, we need tax, and that tax is inherently a good thing?

It is absolutely the case that the investment in public services that results from our tax policy, makes a vital contribution towards making Scotland a great place to live, work and do business.

We have access to a wide range of social security payments and public services that go significantly beyond what is provided in other parts of the UK, including free higher education, free prescriptions and our flagship Scottish child payment.

The Scottish Fiscal Commission has estimated that our income tax policy will raise £1 billion of additional revenue in 2023-24. If the Tories want to put that at risk, they need to tell us what will be cut with a different tax approach.