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What are the financial parameters that we are talking about?

There is also the issue of cross-border purchases and so on, but there are sales taxes in the United States and Europe. They are quite common around the world, aren’t they?

The finance committee from 2011 to 2016, of which I was convener, looked at the matter briefly and we took the view that there was not enough on it. The Scottish Fiscal Commission was in an embryonic stage; we were not at the stage that we are at now; and it was hoped that, in future years, we would be able to look at the issue in greater depth. I should say that our predecessor committee in the last session of Parliament was very sceptical about this as a practical way forward.

However, it remains part of the Smith commission’s work. I take the view that the Smith commission is not necessarily set in tablets of stone. It happened some years ago now; I think that we have to evolve beyond it in some areas, and this might be one of those area where we have to say that this approach will not be a runner in the foreseeable future. Scottish Government officials are looking at the matter, yet, given that we can see no practical or pragmatic way forward, one has to wonder whether that is a good use of public resources.

Before I get trampled by people wanting to come in, because no one has so far, I will add to what you have been saying there. HMRC did a presentation this morning and it said that the changes between each publication in the past year were, indeed, the highest that they had been in the last decade at 9.81 per cent. Mark Taylor, you said:

“The implementation of VAT assignment would further increase the uncertainty, volatility and complexity of the Scottish Budget.”

I will bring in one of my colleagues in a minute but there are a couple of others who want to speak so I will bring them in first. First of all, David Phillips, to add a wee bit more to the mix here, you said that

“VAT has properties that make it a relatively poor candidate for devolution”,

although we are talking about assignment at the moment. Then you go on to say:

“The administrative difficulties of devolving VAT to Scotland should not be overstated”.

Is the issue for you that it would perhaps skew economic activity as well? For example, if food is VAT zero rated and in other areas of the economy VAT is 20 per cent, that would perhaps skew Government policy and decision making, if it were devolved, into areas where it was likely to have a VAT return.

Charlotte Barbour, you have said that

“VAT is the only ‘assigned’ tax in the package of taxes that fund Scotland”,

that the UK Government would retain

“full legislative and administrative responsibility”,

and that

“The aim of VAT assignment is to bring greater accountability to decision making in Scotland. However, the Scottish Government will have no direct controls over VAT rates and policy.”

That goes back to what you were saying initially.

Yes. For example—and, John Ireland, I do not know how you would feel about this—HMRC said that its survey would be 2.3 per cent plus or minus at a 95 per cent confidence interval. It would be looking for just a ballpark prediction, but we have seen the revisions that I mentioned earlier—9.81 per cent out in the current year, which is the highest for over a decade. It almost seems as if volatility has increased rather than decreased as it has progressed with looking at this. How would you feel about that? I know that 2020 was an outlier; I appreciate that.

Hold on a second. If you are taking actions, the costings have to be realistic. The point is that local government is saying that the costings are not realistic. Therefore, even if councils agree to take things forward to the nth degree, which is what they want to do—nobody wants to have contaminated waste, and everyone wants to maximise recycling: that is a given across the Parliament—that has to be funded.

Each local authority is different. For example, Dundee City Council talked about half of its citizens living in flatted properties. Enforcement and behavioural change are extremely difficult, and the cost of educating people will be extremely difficult to meet if we are going to get the long-term behavioural change that we want. Councils have said that they are putting huge amounts of money in, but they are still unable to reach recycling targets and they need additional resources.

We know that the bill is a framework bill, that there will be co-design and that there is going to be secondary legislation, but will the Government make a commitment up front, through the Verity house agreement or whatever, that, if its partners in local government go down that road, they will be funded? Local authorities will be quite reluctant to go down that road if they think that they will not be resourced to do so. It is one thing to say that it is up to them to do this or that, but they cannae do it if they havenae got the money. That is why they want a commitment from the Government that they will be funded.

Local authorities want realistic funding, not an airy-fairy promise that they will collect 100 per cent of fines when that has never happened and never will happen. It has to be realistic, and our concern is whether the financial memorandum is realistic. The evidence that we have suggests that there are elements of it that are not realistic, such as the examples that I have already given.

We will want to ask further questions specifically on that in the weeks and months ahead, so that we can have it clarified in our heads and, indeed, so that the wider Parliament can get a grip on what it means. That will be an important process for us.

This is my last question before I open up the discussion to colleagues—I said that I would try not to hog the session, as I sometimes do inadvertently. Resource borrowing costs and capital borrowing costs are down. Given that interest rates have gone up, why do we have reduced capital borrowing costs? One of the things that came out of our sustainability report was that the UK Government will cut our capital allocation over the next five years by 16 per cent in real terms. One would have thought that the Scottish Government would seek to maximise its capital spend wherever possible, given the need to invest in physical infrastructure, digital infrastructure et cetera. Why has that happened, and what is the reasoning behind the Government’s move on capital?