Hansard

I will briefly pick up on an issue that has dogged our debates on taxation in recent years. It has not come up this afternoon, but it did during last week’s debate on the budget when I did not have time to pick up on it. It is about whether Scotland is better off as a result of income tax devolution. We are all now at the stage where we recognise that, as a result of the specific arrangements in the fiscal framework, it is true to say that, in recent years, Scotland has ended up with less revenue to spend on public services than if income tax had not been devolved.

That is completely separate from the question whether our public services have benefited from the changes that we have made to income tax as a result of such devolution. I will come on to this point later, but for now it is absolutely true to say that our public services have benefited substantially from the progressive changes that we have made. It would benefit the Parliament’s debates on taxation to recognise the significant difference between those two points—in particular, because there is, I believe, cross-party consensus on the need to reform the fiscal framework.

As I said last week, despite the immense challenges, this is the greenest budget in the history of the Scottish Parliament. It is funded in part by the most progressive tax system in the UK—a point that was confirmed earlier today by the Institute for Fiscal Studies. By raising the higher rate of income tax and the additional dwelling supplement, the highest earners and people who buy holiday homes and extra properties will pay a bit more to fund the public services that are so desperately needed during the cost of living crisis.

Scotland has extremely limited devolved taxation and revenue-raising powers. We certainly need more powers over tax and borrowing and we need a more functional reserve, but we also have an obligation to make best use of the powers that we have.

In 2018, the Scottish Greens worked with the Government to deliver progressive changes to income tax. We lowered the tax that is paid by the lowest-paid workers and increased tax for those on higher incomes. Our public services are better off to the tune of £1 billion as a result of the progressive changes that we have made in the past couple of years.

However, given the monumental pressure that the budget is now under, and the need for high-quality public services during the economic crisis, we need to go further. I am proud of the agreement that we have reached on those further changes, which will raise over half a billion pounds more for our public services.

We might be in a cost of living crisis—one that is pushing many households to crisis point—but there are plenty of high-income and wealthy people in this country who can afford to pay a bit more. Those on the highest incomes can afford an extra penny on the tax rate that is paid on the top slice of their salary. People who are in a position to buy a second home or holiday home can absolutely afford to pay a bit more tax on that purchase.

It is incumbent on those who are opposed to the progressive changes to explain why they think that the most privileged people in our society should not be paying a bit more right now, and to explain what they would cut from the budget if they were to prevent those changes.

I welcome in particular the contribution that Liz Smith made to the debate in recognising the challenges that would be posed by voting down the rates resolution and in explaining the position that the Conservatives have come to. I absolutely agree with the points that she made about labour market participation. I commend to Parliament the study by Sheffield Hallam University on that subject, which found that a substantial number of people in Scotland—perhaps in the tens of thousands—would like to work but are on incapacity benefit because they are unable to find the kind of employment that meets their needs as disabled persons. Those people are not trying to avoid being in work; rather, they are people for whom we have not put the right employment support in place to enable them to join the labour market and to contribute to our public finances via tax revenue.

In the period leading up to publication of the budget, both the Scottish Trades Union Congress and Unison produced papers on tax reform. Both papers advance the principle that those who have the most should contribute the most. Although most of their specific proposals were for long-term legislative change rather than for this budget, I believe that they deserve a large share of the credit for the immediate-term progressive changes to income tax and additional dwelling supplement that we will vote on today. The long-term changes that they propose, however, cannot be lost as we move rapidly from one annual budget cycle to the next.

Despite the challenges, this budget delivers for people and planet. It includes a record £2.2 billion to tackle the climate emergency, it delivers more affordable public transport and it provides essential support to children and families—and does so by having the wealthiest people in our society pay a bit more. That is something that is worth voting for.