Seòmar agus comataidhean

I refer members to the decision-making matrix in the document, which lists six aspects of how we go about taking decisions on tax policy. They are not numbered, but the one at the bottom of the column—“Deliverability and Administration”—makes clear the need for detailed and continuous engagement in the process of policy design. For example, with a fully devolved tax such as land and buildings transaction tax or Scottish landfill tax—and indeed for the other taxes that are still to come on line such as the aggregates levy and air departure tax—Revenue Scotland can provide the expertise at the outset to help shape and inform the development of legislation.

Ultimately, our role in that process sits in the legislation that Parliament passes. We want that legislation to reflect best practice and to be informed by the expertise of those who are responsible for operational matters in tax, and who act independently—Revenue Scotland, for example. There will be close engagement and work with the relevant tax authority from the outset of policy design through to implementation. Similarly, should proposals emerge out of the work on local taxation and reforms in that respect, there would be early engagement from the outset with local government, which would act as the tax administration with any local tax, to ensure that we were considering operational matters, which, in turn, would inform how we went about drafting legislation.

The issue is hard baked into the process. We do not design and take decisions on tax policy without giving serious and detailed consideration to issues around avoidance. We achieve that through policy consideration and the work in Parliament to scrutinise legislation. Before we even get to that point, we are in continuous dialogue and engagement with the appropriate tax authority, which can bring to bear technical expertise. That is the approach that we take. In the framework, we convey the point that tax avoidance is a central concern—it is not an afterthought or something that is of secondary importance; it is intrinsic to how we go about tax in Scotland.

That is a fair point. We touched on the limitations of the data that we have available. I take the points that numerous committee members have raised about having data—in the here and now and with regard to forecasts—to more clearly evidence the transition as it takes place. I am happy to take that away, reflect on the issue and come back to the committee with a written response.

The point that Mr Johnson made in recognising our disproportionate reliance on income tax as our primary devolved revenue-raising mechanism is important. There are limits to what we can do with income tax before we start risking the distortionary effects of behaviour change and potentially losing revenue, which the convener mentioned. I know that the predecessor Finance and Constitution Committee explored that in the previous parliamentary session.

Although we will always consider how we can best use our policies on income tax, particularly on the strategic objective to be responsive to societal shifts, the key task is to grow our tax base. Ultimately, the way that we seek to achieve that will be set out in the national strategy for economic transformation and its supporting documents. We will always look for ways that we can show that our tax system is as efficient as possible and that it maximises revenue, but the key challenge is to grow the number of highly paid, highly skilled jobs in Scotland. In turn, that will lead directly to increased tax revenue.

Would Alex Doig like to give some context on how the document was developed in relation to the broader economic sphere? I am conscious that we are focusing on tax, but he could say something about how the document is informed by work that goes on more widely across the Government, particularly with reference to Mr Greer’s question about the interaction between seeking to raise revenue by direct taxation or increasing the tax base.

I will ask Alex Doig to come in on the point around how data informs tax policy.

That touches on the question that Daniel Johnson or the convener asked earlier about what takes the place of oil and gas once it is no longer there, because that is where we have a concentration of higher earners. I go back to the point, which I made previously, that it ultimately comes down to the opportunities that are presented through the transition to net zero. We have to ensure that the transition is just, but that is where the opportunities will arise. We know that there are particular strengths in the Scottish economy in an array of areas such as food and drink, tourism, life sciences and higher education, but, when it comes to the jobs that are displaced by the transition to net zero, the opportunities will come through jobs that are involved in the delivery of net zero.

The ask is to draw a more explicit link between tax policy and economic policy. We are almost considering this in isolation as a tax framework. I take that on board.

The key point that I want to bear in mind is that our income tax revenues are growing—

Can you pick that up please, Alex?

I take your point. There is a combination of commitments, including the manifesto commitments on which the Government was elected and the commitments that are the product of the joint agreement with the Scottish Green Party. Fundamentally, it will take time to implement what the citizens assembly produces. Depending on how significant and profound the changes that the assembly advocates are, it could take some time to implement them, given the legislative process and potentially a period of implementation beyond that.

Our commitment to maintain the small business bonus and ensure that at least 100,000 businesses benefit from it, on which we were elected, is for the lifetime of this Parliament. We will deliver in the lifetime of this Parliament our commitment to extend council tax exemption to under-22s. That provides certainty that we will implement that change.

With the citizens assembly, there is an element of the unknown, in the sense that I cannot predict what the outcome will be. It is for the assembly to engage in deliberations and make proposals. I do not want to say anything that could be seen to pre-empt that process.

We all recognise that there have been long-standing discussions and debates on local taxation. All parties have engaged in pieces of work, either independently or on a cross-party basis, to explore potential amendments to or replacements for council tax. I think that we are all keen to see what the assembly comes up with and to give the proposals that emerge from that process the due consideration that they deserve.

I am not in a position at this point to outline what specifically will be in the remit. There is a commitment to a delivery process and engagement with the Convention of Scottish Local Authorities, and I do not want to pre-empt that. However, I assure you that the Parliament will be kept fully abreast of all proposals as they are developed ahead of the citizens assembly’s work commencing.