Seòmar agus comataidhean

Scotland has an ageing population and declining workforce and the Scottish Fiscal Commission has said, based on current projections, that the funding gap is likely to remain for years. In a paper submitted last year, you suggested that the Scottish Government should look to increase tax revenues by around £3.3 billion, which is hugely significant if we think of Scotland’s current tax burden. For example, someone earning £43,662 a year would pay 42 per cent income tax and 12 per cent national insurance and a lot of the money that they have left would probably go on fuel duty, excise duty, value-added tax and so on.

What would be the impact of raising that sum? I realise that it would not all be done in one go, but what would be the impact on behavioural change? The Scottish Fiscal Commission has expressed concern that increasing taxation to a certain degree results in behavioural change whereby people do not work as hard or move somewhere else.

I will give you an example. Under a previous Conservative Government, Chancellor Osborne limited pension pots to £1 million. As a result, a lot of doctors, including general practitioners and consultants, realised that they would end up paying more in tax than they would gain, so they decided that they would retire early. That was a detrimental behavioural change, and the UK Government is now looking to reverse that policy—and has reversed it, to a degree.

What would be the behavioural change in this case? Last week, we heard that there are only 18,000 top-rate taxpayers in Scotland.

There is indeed, so I will give you plenty of time to answer.

To be blunt, that is a pragmatic thing. People might not talk about it publicly, but Conservative, Labour and Scottish National Party Administrations have not done a revaluation because of loss aversion. The people who are better off because of revaluation will shrug their shoulders, but the people who are worse off will hate you and not vote for you—it is as simple as that, to be perfectly honest. Perhaps people should be more honest about that. There is strong opposition in the Parliament to the Scottish Government’s council tax proposals, and committee members have already spoken out against them.

Your submission talks about

“Exploring every avenue to increase tax”.

Surely that sends a signal to people who feel that, with 14 interest rate rises in less than two years and with inflation hitting not just the public sector but the private sector, maybe the time is not right to do that.

There will be a division.

For

Gibson, Kenneth (Cunninghame North) (SNP)
Halcro Johnston, Jamie (Highlands and Islands) (Con)
Marra, Michael (North East Scotland) (Lab)
Mason, John (Glasgow Shettleston) (SNP)
Smith, Liz (Mid Scotland and Fife) (Con)
Thomson, Michelle (Falkirk East) (SNP)

Against

Greer, Ross (West Scotland) (Green)

The next item on our agenda is to take evidence in relation to the committee’s inquiry into the Scottish Government’s public service reform programme. This session continues the evidence taking that we started before the summer. I welcome David Moxham, deputy general secretary of the Scottish Trades Union Congress. David and I served on Glasgow City Council together a quarter of a century ago.

I intend to allow up to an hour for the session. We have your written submission, David, so we move straight to questions. As well as questions on reform, members may take the opportunity to ask Mr Moxham any questions on the STUC’s pre-budget 2024-25 submission, which has also been circulated with the meeting papers.

I will kick us off on the reform agenda. The Deputy First Minister has said:

“it is for individual public bodies to determine locally the target operating model for their workforces and to ensure workforce plans and projections are affordable in 2023-24 and in the medium term”.

Does the STUC agree or disagree with that?

You touched on Christie. One of the issues that the committee has deliberated over many years has been the preventative spend agenda. How important is preventative spend in relation to reform of public services?

Indeed.

The Scottish Government specifically talked about freeports being different from green ports, so why is it not trying to give itself a competitive advantage by making the period seven or nine years? The Government has put a number of strictures on green freeports, which one might say makes them less competitive, albeit that there are some businesses that one might not necessarily want to attract in the first place. If the Government is looking for Scottish green ports to be a success, why not do something different from what the UK is doing? Are you being prevented from doing that, or is it a Scottish Government decision?

That is very helpful. However, you quoted three definitions, and it would be good if we could boil things down to one specific definition, because, if we do not do that, it leaves room for ambiguity, which we want to reduce as we move forward.

Another issue that came up was the timescale that will be available for investors. Unite the union and David Melhuish from the Scottish Property Federation felt that five years was not long enough. Unite said that the period should be as long as possible, and David Melhuish said that it can take up to nine years for investments to come through. If we want to ensure that green ports are impactful as early as possible and that they attract as much investment as possible, is the Scottish Government thinking of extending the period beyond five years? What is the logic behind choosing five years?

Good morning, and welcome to the 22nd meeting in 2023 of the Finance and Public Administration Committee. Before we start, I congratulate all members of the committee who contributed to ensuring that we won the powering change award at last week’s Holyrood awards. It is a committee award, not an individual one for me, as convener, so I thank everyone. I doubly thank Michelle Thomson, who won the political hero award on Thursday night. [Interruption.] I named everyone on the committee to ensure that you were all recognised, including new members such as you, Jamie—you also got the nod.

Let us get on with the meeting and the matter at hand. The first item on our agenda is an evidence session with the Minister for Community Wealth and Public Finance on a draft Scottish statutory instrument—the Land and Buildings Transaction Tax (Green Freeports Relief) (Scotland) Order 2023. The minister is joined by Scottish Government officials Laura Parker, who is the land and buildings transaction tax policy lead, and Laura Duffy, who is head of the green freeports policy and delivery unit.

I welcome our witnesses and invite the minister to make a short opening statement.