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Thank you for that helpful opening statement. I have scribbled down quite a few things to ask on the basis of your statement; I hope that I can read my writing when I try to ask my questions.

The first thing that I will ask about is the consultation on part 2 of the bill. Why did the Scottish Government not consult on those provisions? That caused some irritation among our witnesses last week from the Law Society of Scotland, the Chartered Institute of Taxation and the Institute of Chartered Accountants in Scotland.

The policy memorandum states that the bill will support the Scottish Government’s ambitions for a circular economy through

“encouraging the minimum necessary exploitation of primary aggregates ... maximising the use of secondary and recycled aggregates, and ... incentivising innovation and development of alternative materials.”

We are in a world in which the climate is changing rapidly and the world is moving forward quickly, and we are talking about a fairly modest bill that will not be implemented for a couple of years. What will actually be done to fulfil the ambitions? I am not really seeing anything. I am hearing a lot of talk about stability and continuity, but we are talking about a couple of quid a tonne of tax on rock coming out of the ground. I do not see the incredibly complicated picture that you seem to be portraying, minister—surely it is pretty straightforward.

The Scottish Government is not setting out what it would like to see. I know that you are saying that we cannot pre-empt taxes a couple of years ahead, but the tax has been £2 a tonne for 15 years. Where is the incentive for people to invest in a multimillion-pound recycling plant? We visited a facility that invested £4 million, and there is another facility that invested £2.5 million. Others want to recycle to avoid the 700,000 tonnes that went into landfill last year, if the amount of soil can be reduced.

What is being done to achieve that? It looks as if this is going to be a landfill tax that just mirrors what the UK has done for the past 10 years. Is that likely to be the situation 10 years from now? I know that you cannot predict the future, but the direction of travel that I am hearing in all this talk of caution and stability is exactly that.

How much does it cost per mile to ship a tonne of aggregates by truck, for example?

I appreciate that, so how much does it cost by rail or by ship? If we are talking about the difference between Scotland and England, what is the elasticity of demand? I asked that in a private briefing with officials and I could not get an answer. The bill has been worked on for a couple of years and I thought that you would have a pretty straightforward answer to that. If you put the tax up from £2 to £3, does that mean that you will not sell any aggregate in England? Will there be a 10 per cent reduction? Will it have no effect whatsoever? Similarly, what will happen if you reduce the tax by £1?

Despite all the talk about moving towards a Scotland where there is more circularity, the financial memorandum makes it look as though, over the next five years, there will be no change whatsoever in the estimated tax take. I appreciate that that might be partly because of the lack of data that you talked about, but it looks as though there is no ambition either to increase or reduce the tax by trying to move people into greater recycling. Of course the industry will sit where it is at the moment, because vested interests always oppose change, do they not?

If I have a company that has a branch in Manchester, one in Belfast and one in Glasgow, I will know what its output, cost base and profit are. I am really struggling to understand the lack of data. We are talking about millions of tonnes of rock. It is not as if people can hide it—well, apparently, they can hide it, because we have found out that loads of quarries are unregistered.

It is just that, with the landfill tax, there has been no change or differential from the UK whatsoever, even in relation to inert waste, for example, where there is perhaps more room for manoeuvre.

I will move on, because I have a couple more questions and colleagues want to come in. You have said that you will take a more distinctive approach to compliance. What do you mean by that?

We talked about data earlier. One of the things that I was astonished by was that, despite the fact that we would think that the 32 local authorities would know exactly what is going on in their areas and would feed that information into the Scottish Government, there seems to be a bizarre lack of knowledge of just how many unregistered quarries there are in Scotland. They are producing who knows how much aggregate, on which the taxpayer is missing out on getting a return. Compliance is important. One of the positive benefits of devolution would be if there was a push to ensure that all those quarries are located and dealt with. Some people say, “Oh, you can just dig up a couple of hundred tonnes from a farmer’s backyard and fill in the land later.” However, from what we have been told, a lot of those sites are much bigger than that and are major quarries. It is bizarre that the UK Government does not seem to have done more work to implement a levy and trace those sites with HMRC. I hope that the Scottish Government and its agencies will do more about that.

What specifically do you plan to undertake in order to ensure that that situation—in which, arguably, people are effectively tax dodging—is addressed? What Mr Waite said about the supply chain is important, but what is going to be done to catch those who do not comply in the first place?

I think that we are conflating two things. One is whether Scotland’s aggregates tax, when it comes in, will incentivise the switch to recycled secondary products so that fewer natural products are used. The other issue, which you mentioned, is compliance. I think that everybody round this table wants those who are producing those aggregates but not currently paying taxes to pay those taxes. That is an absolute, and I think that everyone in the industry who is legitimate is doing that. I commend the fact that Revenue Scotland is determined to ensure that that happens.

I will switch back to that issue in a second, but I return to my initial question about a differential in taxation. We appreciate that recycled aggregates will be exempt from the tax, and that there are other issues, such as whether local authorities should be paying the tax. However, the idea behind the landfill tax was to encourage a change in behaviour. That has happened on a UK basis, but that tax has never varied between Scotland and England. The bill’s policy memorandum says that the approach is to ensure

“that the devolved tax can evolve over time to support Scottish Government circular economy objectives.”

It goes on to say that the objectives are to encourage the minimum necessary exploitation of primary aggregates, maximise the use of secondary and recycled aggregates, and incentivise innovation and development of alternative materials.

The tax on aggregates has been £2 a tonne since 2009, regardless of inflation and all the rest of it, and it is going up to a thumping £2.03 next month. Is that actually happening? How will £2 a tonne across the board in Scotland—the same as in England—possibly have any impact on behaviours?

Good morning, and welcome to the 10th meeting in 2024 of the Finance and Public Administration Committee. The only item on our agenda is to take evidence from two panels of witnesses on the Aggregates Tax and Devolved Taxes Administration (Scotland) Bill.

First, we will hear from Eric Brown, a member of the Chartered Institute of Taxation’s Scottish technical committee; Justine Riccomini, the head of tax for employment and devolved taxes at the Institute of Chartered Accountants of Scotland; and Isobel d’Inverno, the convener of the Law Society of Scotland’s tax law sub-committee. I welcome you all to the meeting. Thank you for your written submissions.

We will move straight to questions. About 150 current United Kingdom taxpayers have been identified as being likely to be required to register for the Scottish aggregates tax. Is that a fair reflection of the actual number of taxpayers, or have a number of them not been picked up yet. Is anyone able to answer that question?

To be fair, I should have asked Isobel d’Inverno to answer the question, because it is her submission that mentions the figure.