Hansard

I am pleased to be able to take part in the debate. Taxation may not be everyone’s most exciting topic, but I find it extremely interesting, and the bill is particularly significant, as it is to become the underpinning legislation as we move forward, whatever the constitutional settlement.

As I said when I spoke on the subject in May, one of the problems of UK tax legislation has been its emphasis on the letter of the law as against the spirit or intention of the law. As a result, we have had situations in which the wider public has been clear that tax should have been paid but some taxpayers have avoided tax quite artificially. That has been referred to already.

That is particularly galling for ordinary members of the public who, whether employed, self-employed or retired, are pretty strictly regulated by the various tax authorities. Therefore, I welcome the more principles-based approach in the legislation. I hope that that approach will also be taken in future Scottish tax bills.

On the subject of principles, like others, I am happy to welcome the emphasis on Adam Smith’s maxims, including, in particular, the one that says that taxes should be proportionate to the ability to pay. In the committee, we discussed the intricacies of that approach, and the differences between proportionate and proportional. I admit that those differences have now escaped me. However, it is clear that there are some taxes, such as council tax, that are not really linked to the ability to pay, except in the loosest possible sense. I hope, as we move forward, we can remember that principle, and that new and amended taxes will be more proportionate.

The issue of certainty has come up many times as we consider the bill. That is one of Adam Smith’s maxims that we all support. However, I continue to think that the demand for certainty can sometimes be a smokescreen and can mean only more certainty for those who want to avoid paying tax. Therefore, I support the cabinet secretary’s insistence that we stick to a principles-based approach, including having a wider general anti-avoidance rule than seems to exist in the UK.

Only two relatively small taxes are being fully devolved, while income tax is not really being devolved at all, as we will have only partial control over one aspect of it. That could, frankly, give us the worst of both worlds, with an already complex UK income tax system becoming more complex and therefore more expensive to operate. That is the downside of devolution and, in particular, of sharing a tax rather than devolving it.

Another factor in this is the block-grant adjustment that Michael McMahon referred to. It is disappointing that, having promised to devolve those two taxes, it now seems that Westminster is attempting to backtrack and keep its hands on as much of them as it possibly can. That does not bode well for the vague assertion that more tax powers might—or may; or could; or should possibly, at some stage, given the right circumstances and the right Government at Westminster, and on the assumption that the UK does not leave the EU and does not go completely bankrupt—be devolved in the event of a no vote.

However, I prefer to be optimistic and look forward to our taking control of the whole range of taxes, as normal countries do. We will probably have to start off by modifying the UK system but, at some stage, we will have the challenging opportunity of writing our own legislation for those major taxes. I look forward to that exercise.

The great thing about what we are doing today is that we are setting out a direction of travel. We want to do things our way, in a way that fits Scotland’s needs. The bill is a good start, and I whole-heartedly support its approval.