Seòmar agus comataidhean

I am interested in the move from collecting revenue towards a more environmentally sustainable trajectory and whether there is a trade-off in that regard for the public accounts. I think that there is reasonable agreement on that, but there are fiscal challenges for Scotland at the moment.

More broadly, we have seen significant issues with behaviour change on the income tax side of the agenda. As more taxes are collected, are there any broad lessons or reflections that Revenue Scotland could give us on how behaviour change in Scotland under the devolved taxation regime is beginning to evolve?

I want to draw a slight distinction between compliance and minimisation, if that is possible. It is right that everybody complies, but businesses will tend to try to minimise their tax in order to heighten profitability. Does increased visibility result in higher minimisation?

Have you been doing that?

Do you think that your Scottish Government colleagues might be drawing those lessons for the aggregates tax? I am sure that we can ask the minister about that when he comes to see us.

As we develop our work on the aggregates tax, which we have touched on a lot, can we assume that that will result in the same trend? Have you modelled that?

Is there a flipside to raising taxpayer awareness? We know that the static costing for increasing the additional rate to 47p for 2023-24 was that it would yield £32 million of revenue, but after behavioural effects, it generated £3 million. I know that that is not a tax that you handle, but there is a question about the effect of awareness raising by the institutions, including the Parliament, on devolved taxation. That is what I am trying to explore. The more visible some of those issues are, the more heightened the behavioural effects could be.

I am thinking, in particular, of the effect in relation to the aggregates tax. It seems to me that there might be significant market effects on where the businesses obtain business from, where they get their supply and what products people purchase. The differential taxation situation might affect some of that.

The Barnett formula was set in similar circumstances. It was thought that it might be revised within a couple of years but it has existed for decades and we are still unpicking the complexities of it. Mairi Spowage might want to come back to me on that one, but I invite David Phillips to share his thoughts first.

The practical issues that Charlotte Barbour has set out feel huge to me. I have to say that I was far from privy to any of the discussions in the Smith commission, so we will just have to assume some of the motivations in this respect. Perhaps income tax was not felt to be a sufficient indicator of economic performance and, therefore, the desire was to have a basket of different taxes that would be indicative of how Scotland was performing. I am keen to hear people’s views on whether having just the one indicator with regard to income tax performance creates a very limited set of incentives for the Scottish Government and institutions to drive activity in one particular way within our economy and whether that perhaps skews some of the incentives in the way that Government might act.

In the absence of any real public discussion or parliamentary scrutiny before the agreement and the publication of the report, we are left reading priorities into the text. It seems that the Scottish Government has placed the population dynamics at a higher level of priority than other economic challenges such as low gross value added or longer-term lack of investment in research and development that might be driven by more capital spend. Is it your feeling that it has put the immediacy of those issues ahead of longer-term economic transformation, as it might put it?

Upon which basis decisions are made, I suppose.