Meeting of the Parliament 14 December 2016
As my colleague the finance secretary has made clear previously in this chamber, the Scottish Government will confirm its tax proposals in its draft budget, which will be published tomorrow.
While not wanting to pre-empt the finance secretary’s draft budget, I welcome this opportunity to discuss the important new tax powers and how they may best be used for the benefit of Scotland’s people and our economy. I will also challenge the premise of the Tories’ simplistic argument and damaging narrative, which harms Scotland’s interests—the Tories are failing to sell the strength of Scotland’s offer for individuals, families and businesses.
The introduction of the new income tax powers will be the most significant act of tax devolution to date, but the Scottish Government approaches those powers from its experience of the successful commencement of land and buildings transaction tax and Scottish landfill tax, its operation of non-domestic rates and its reform of local taxes.
In preparation for the devolution of the fully devolved taxes under the Scotland Act 2012, the then Cabinet Secretary for Finance, Employment and Sustainable Growth, John Swinney, set out to Parliament a Scottish approach to taxation. That approach is founded on the four core Adam Smith principles that taxation should be certain, convenient, efficient and proportionate to the ability to pay. Alongside that, we have a commitment to taking a collaborative approach to tax policy development and a robust approach to tackling tax avoidance, where we have the powers to do so.
Crucially, we have sought to use the new powers on tax to make a difference for Scotland. We pioneered a progressive approach in the UK to the setting of rates and bands for LBTT, whereby the amount that is paid is more closely related to the value of the property or transaction and therefore to the ability of individuals to pay. We have used opportunities to make Scottish landfill tax more effective in tackling the wasteful disposal of resources, thereby supporting our goals for a circular economy.
As set out in the programme for government, we propose to reduce air passenger duty by 50 per cent by the end of the parliamentary session, and to abolish it when the public finances permit, to address a tax that is the most expensive of its kind anywhere in Europe and which continues to act as a barrier to Scotland’s ability to secure new, more efficient direct international services, and to maintain existing ones.