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Chamber and committees

Official Report: search what was said in Parliament

The Official Report is a written record of public meetings of the Parliament and committees.  

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Dates of parliamentary sessions
  1. Session 1: 12 May 1999 to 31 March 2003
  2. Session 2: 7 May 2003 to 2 April 2007
  3. Session 3: 9 May 2007 to 22 March 2011
  4. Session 4: 11 May 2011 to 23 March 2016
  5. Session 5: 12 May 2016 to 5 May 2021
  6. Current session: 12 May 2021 to 21 August 2025
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Displaying 3539 contributions

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Finance and Public Administration Committee

Budget Scrutiny 2025-26 and Economic and Fiscal Forecasts

Meeting date: 10 December 2024

Kenneth Gibson

Resource funding is increasing by 0.8 per cent in real terms, but are you saying that, once we take out social security spending, there will be a 0.3 per cent decrease, so there is a shrinkage in what Scottish ministers have to spend in the forthcoming year?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 and Economic and Fiscal Forecasts

Meeting date: 10 December 2024

Kenneth Gibson

I am sorry—I appreciate that, but is the issue not that the impact is built into the bands themselves? Now that we have had a year of this, have you been able to assess what the impact has been?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 and Economic and Fiscal Forecasts

Meeting date: 10 December 2024

Kenneth Gibson

Paragraph 67 of your report says:

“We estimate that the behavioural response reduces overall yield of the policy by £10 million in 2025-26, with this behavioural response reaching £31 million by 2029-30.”

How much are the two higher rates—the additional advanced rate and the top rate—perceived on paper to contribute to income, and how much do you believe is being lost to behavioural change as a result?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

I will stick with tax for a minute. One of the issues that is being talked about is the coherence of the tax strategy. In relation to the UK tax system, IFS director Paul Johnson said:

“if this government really wants to focus on growth, then part of the plan needs to be a much more coherent tax strategy than we saw”

in the 2024 budget. Will you explain what the IFS believes that “more coherent ... strategy” should be and how we in Scotland can build on that, bearing in mind that a lot of our tax strategies depend on what happens UK wide?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

I will open up the session now, and the first colleague to ask questions will be Liz Smith.

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

You mentioned incorporation. The Office for Budget Responsibility has said that, across the UK, the measure is likely to encourage about 17,000 incorporations, costing about ÂŁ0.7 billion in revenue. Have you seen higher rates of incorporation in Scotland, in relative terms, as a result of recent tax changes in the rest of the UK? Alternatively, is there no real difference, or do you not have the data to assess that yet?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

No—it is the cash headroom, which is £9.9 billion.

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

Thank you for that. In your document, you say:

“as with funding in 2024-25, part of the increase in resource funding ... reflects extra SCAPE costs rather than an increase in spending power.”

You have talked about the fact that the budget is increasing fairly modestly in real terms. However, that also means that the Scottish Government has to be very careful about how it spends its money. You have talked about behavioural response in relation to income tax, and mentioned tax revenues in that regard, too. You highlight that the SFC found that

“such responses will offset half of revenues from the Scottish 45% rate and 85% from Scotland’s top rate of tax”

and that there is a need to better evaluate the impact of that. The document goes on to talk about

“the complexity introduced by having 19%, 20% and 21%”

and suggests that that

“is particularly unwarranted”.

Where do you think the Scottish Government is in terms of the issues of taxation and behavioural responses at this time? The document goes on to say that the Scottish Government should be

“open to reversing course if new evidence again suggests bigger-than-expected behavioural impacts”

and that

“a strategy should always be open to revision, not set in stone”.

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

It is 0.3 per cent of our expenditure targets, so it is about ÂŁ10 billion.

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

We have gone well over our time and I know that our witnesses and members have other meetings to go to, so I bring the session to an end. I thank everyone for their contributions.

The Scottish budget be published tomorrow, 4 December. The committee will take evidence on the Scottish Government’s tax and spending plans at future meetings in December and January and all members have been given details of the budget timeline.

As that was the only item on our agenda, I close the meeting.

Meeting closed at 11:34.