Meeting of the Parliament (Hybrid) 25 February 2021
I will not, after Mr Findlay’s insult to the cabinet secretary.
The section on tax policy in the Finance and Constitution Committee’s report—paragraphs 167 to 178—which has been referred to, is well worth reading. It calls for an inquiry into and a debate on a Scottish approach to taxation.
I accept that today we are specifically looking at income tax rates, but this seems like a good time to start thinking of the way ahead: the recovery from the pandemic and how tax fits as part of that. I think that there is an appetite among the public to support the NHS and pay more for care workers and care homes, and perhaps to pay more tax in order to fund those things. Even Scottish Chambers of Commerce agreed that it would support a debate on tax reform. After all, many businesses that have traditionally argued for lower taxes across the board have been very keen to receive funding from the public purse, which of course is funded by all of our taxes.
We have had a Citizens Assembly of Scotland report, and we had a debate on that last week. A key theme of that was the lack of understanding of taxation among the public. However, we know that 99 per cent of the public understand budgeting perfectly well. They have to juggle income and expenditure to get a balance, and they know that we in Parliament need to do so as well.
I very much support the call for the incoming members of Parliament and the incoming finance committee to consider an inquiry and a wider debate during 2021-22 so that the results can impact on the budget in 2023-24.
I turn to income tax more specifically. We heard from witnesses, including the Office for Budget Responsibility, that fiscal consolidation will be necessary in the medium term, particularly if interest rates rise and the cost of borrowing increases. I do not want to see public spending cut in either the UK or Scotland. At some point, we need to look at taxes, including income tax.
I take the point that we do not want to damage the recovery by raising taxes too soon and taking away money that might be better spent with businesses that are struggling. The Government makes the point that it wants to give certainty and stability, and I very much support that.
Thanks to an increase in the number of bands a while back—I accept that the Greens were part of that discussion—we have a more progressive system than the UK has. Some people are clearly struggling financially, with the hospitality sector and much of retail still closed. Workers’ hours are being reduced and, in particular, it is clear that women and low-paid workers have been suffering most. However, some people are better off because of Covid—that probably includes most members. People on fixed salaries have saved on commuting, meals, nights out, childcare and a range of other expenditure. Some people could therefore afford to pay a bit more tax.
I refer back to the previous debate and the importance of the differential social and economic impact of Covid. I believe that we need to look at increasing equality by targeting our expenditure at those who are most in need and by expecting those who are most able to contribute more to do so.
Overall, I am happy to support the Scottish rate resolution, but we need to look more closely at taxation in the medium to longer term.
17:12