To ask the Scottish Government what analysis it has undertaken of how income tax divergence has impacted or may impact private sector recruitment. (S6O-03369)

Our tax policies are grounded in evidence and we regularly monitor data on the tax base throughout the year, as well as engaging with business organisations to understand the trading conditions that they face. The latest data from His Majesty’s Revenue and Customs shows that the number of payrolled employees in Scotland has grown to a near record high, while separate HMRC research has recently shown that Scotland has attracted thousands of taxpayers from the rest of the United Kingdom since 2017-18. That is contributing to record income tax receipts, with Scottish income tax now forecast to raise around £18.8 billion in 2024-25.

The Minister is keen to quote figures that are four years out of date. Since then, we have seen massive tax hikes in Scotland. He talked about evidence and data. Well, here is some evidence and data. Someone who earns £50,000 or more in Scotland will pay 20 per cent more tax than they would in any other part of the UK. It is not a sustainable position that that is not affecting the private sector’s ability to recruit. Every commentator says it—the Institute of Directors, the Scottish Chambers of Commerce, Scottish Financial Enterprise and even the Scottish Fiscal Commission are warning of the effect of tax divergence on recruitment. Will the minister not accept that the business sector is telling us and the Government that Scotland’s increased tax levels are hammering its ability to recruit people to well-paid jobs in Scotland?

I will start with a point of consensus. It is exceptionally important to engage with business and to work constructively in a shared endeavour for economic growth.

Here is where I take a slightly different view. First, the most recent data that we have to base our assumptions on is from 2021-22, and it shows that there was net positive migration to Scotland across all income tax bands.

Secondly, it is important to look holistically and in the round at, for example, the significant divergence in average property prices in Scotland from those in the rest of the UK and the significant difference in average council tax compared to the rest of the UK. If a young professional is fortunate enough to be in the position of earning £50,000 a year and they have been through an undergraduate university course in Scotland, unlike their counterparts in England they will not be carrying the better part of 30 grand of tuition fee debt.

Across a range of measures, we use our progressive income tax policies in Scotland to deliver a competitive environment as well as the best social contract that is on offer anywhere in these islands.

Opposition members often highlight concerns about the potential impacts of Scotland’s progressive tax system. Can the Minister say any more about what assessment the Scottish Government has made of the recent HMRC research, which indicates that thousands more taxpayers have moved to Scotland than have left each year in the period after Scottish income tax was introduced?

The reality is that, ever since income tax was first devolved, Opposition parties have claimed that even the slightest policy divisions would lead to an exodus from Scotland. Recent HMRC research dispels that. Growing numbers of taxpayers are leaving the rest of the UK for Scotland, with net in-flows averaging 4,200 taxpayers each year between 2017-18 and 2021-22. In the last year for which there is available data, taxable income grew by around £200 million due to that movement of taxpayers. I will leave it to others in the Parliament to explain how slashing taxes and running down public services would make Scotland a more attractive place to live.