Meeting of the Parliament 14 December 2016
I will turn to council tax later, and I hope that Willie Rennie will pick up on those points.
Income tax alone will account for the funding of more than a third of the Scottish budget and, as such, those powers must be used responsibly. However, we maintain that using them responsibly might mean being prudent in doing so. I will expand on that.
As we all know, the current fiscal climate is challenging. The UK Government is continuing its counterproductive austerity approach, which is hurting those on low incomes, growing inequality and stifling economic growth, while the European Union referendum result and the subsequent paralysis of a divided UK Government are delivering economic uncertainty and harming the confidence of Scottish and UK businesses.
In the most challenging of times, the Scottish economy has shown resilience. In the first half of 2016, prior to the EU referendum, the Scottish economy continued to grow in the face of on-going external headwinds that were associated with weak global growth and the impacts of lower oil prices on the oil and gas sector and its supply chain. Indeed, in the three months leading up to the EU referendum, Scotland’s economy grew by 0.4 per cent, which was the highest rate of quarterly growth since the start of 2015.
However, we aspire to strengthen Scotland’s economic performance, and we are not complacent about the task that we face. Therefore, we must ensure that we set income tax rates and bands and the wider package of revenues in such a way that they work to the benefit of the people and the economy of Scotland.
In March and in the Scottish election campaign, we set out our intention to protect all low-income taxpayers, and we have proposed to do that by freezing the basic rate of income tax for the duration of the parliamentary session. Equally, we need to ensure that the delivery of key public services is protected and continues to serve the needs of the people of Scotland. I will turn to that later.