Meeting of the Parliament 11 February 2016
Mr Findlay must spend all his time working out how to sit on the back benches hurling abuse at people left, right and centre. He does not pay attention. Of course I stand by those remarks, but I am not prepared to add to the burden on low-income households that are wrestling with difficult decisions. It is not really any more terribly complicated than that.
If I can, I will now get around to the historic moment. On this historic occasion, I am asking the Scottish Parliament to agree a Scottish rate of income tax of 10 pence. In short, Scottish taxpayers will see no increase in their income tax next year. That is the right decision that takes into account the challenges that are faced by members of the public and the fact that the power, were we to exercise it, would require us to increase income for every band of taxation, which would put a disproportionate burden on the incomes of low-income households. I am not prepared to do that as part of this year’s budget.
Today’s decision comes ahead of any powers that we might get from the Scotland Bill that is being considered by the United Kingdom Parliament. As we have previously announced, we will set out by the end of the parliamentary session how we will use the further income tax powers in the Scotland Bill. Before then, we must resolve the fiscal framework. I remain focused on delivering a framework that is fair for Scotland, fair for the United Kingdom and faithful to the conclusions of the Smith commission. I will not agree to anything that fails those tests.
The setting of the Scottish rate of income tax is inextricably linked to the structure of and measures in the budget. From when I made the 10p proposal in the draft budget, my main priority has been to protect our lowest-income taxpayers at a time when household budgets are tight. Despite Westminster’s cuts, the budget that is before Parliament includes record funding for our national health service, protection for front-line policing, protection for college budgets and significant investment in education, including higher education.
We have proposed what I accept is a challenging but fair settlement for local government, that delivers £250 million of new investment in health and social care, protects high quality school education, maintains teacher numbers and continues the freeze in the council tax. In a move that I hope all parties across the chamber will welcome, it will also deliver the living wage for care workers. Those actions and many of the other measures that are supported by this year’s budget will help to grow our economy, reform our public services and, crucially, protect household incomes.
At the heart of the debate on the Scottish rate of income tax has been the Government’s decision to act to protect the incomes of the lowest-income taxpayers, who would be directly attacked by any move to increase the rate of taxation from 10p to 11p. After a week of debate and consideration of the issue, I hope that this afternoon will be the moment when the Labour Party sets out for us the basis on which it thinks and is confident that it can deliver some form of protection for low-income taxpayers as a consequence of its decision to increase the Scottish rate of income tax. If the rebate that the Labour Party has talked about is a tax relief, it falls outside the powers of the Scottish Parliament in relation to income tax as conferred by the Scotland Act 2012. If it is a social security payment, it will be outside Parliament’s competence as defined in the original Scotland Act 1998. There are therefore significant legal questions that have to be addressed by the Labour Party in the contributions that Labour members are going to make in Parliament this afternoon.
Secondly, there is a question about whether the rebate could reach members of the public and whether the Labour Party has allocated sufficient resources to cover that. The estimates that I have done show that 1 million taxpayers, workers and pensioners could be eligible for the £100 rebate, which would therefore cost £100 million. That is more than the Labour Party says it has allocated for that particular challenge.
Thirdly, the Labour Party must tell us how much the rebate would cost to administer. It costs more than £40 million to administer council tax reduction and housing benefit in Scotland; the Labour Party believes that the rebate can be administered for £1 million. That tells us how much detail the Labour Party has gone into on the issue. The only conclusion that I can draw is that it is unlikely that anyone would receive the rebate that Labour is talking about. It is a posturing intervention from the Labour Party—it is not a credible plan for Government and it comes from a party that is not even fit to be in office.
It is crystal clear that when it comes to the taxation of newly qualified nurses, newly qualified teachers, police officers, firefighters, office workers, bus drivers and shop workers it is not the wealthy whom Labour is targeting. Labour is targeting working people who are busting a gut to make ends meet. This Government will not punish those individuals.
Our budget is designed to support the creation of a strong and sustainable economy, to reform public services and to tackle economic inequality. Our commitment to maintain the Scottish rate of income tax at 10p in the pound enables us to give support to individuals to do exactly that. It is a budget that mitigates the worst impacts of the UK Government’s welfare cuts and austerity agenda, because it includes £38 million for the Scottish welfare fund, up to £343 million for the council tax reduction scheme and £35 million to ensure that nobody pays the bedroom tax. It allocates £33 million to raise attainment, funds 600 hours of free childcare for all three and four-year-olds and vulnerable two-year-olds, and invests more than £1 billion in higher education. It increases the resources that are available to national health service boards and invests an additional £250 million in integrating health and social care services. It protects family budgets by freezing the council tax for the ninth year in a row, and provides meaningful pay rises for our lowest-earning public sector workers, including through our commitment to the Scottish living wage.
That is the difference between this Government and the parties that argue for a tax increase: we want to give low-paid people a pay rise, and those parties want to give them a tax rise. This Government is on the side of working people and is supporting them in their efforts to make ends meet in their households. We will not increase their taxes; we will invest in public services and protect household incomes.
I move,
That the Parliament agrees that the Scottish rate of income tax for tax year 2016-17 is 10%.
17:32