Seòmar agus comataidhean

Thank you very much. That is all from me, convener.

Unless any of the other witnesses wants to pitch in on that, I have finished my questions, convener.

That is fantastic. We have not quite figured out how to fill the gap in the remaining quarter of this year, so every little helps in that regard.

On the question of behaviour change, do you have an estimate of what the tipping point would be at which ADS would become net negative in revenue terms? It is an interesting tax, in that it has two objectives—one is to raise revenue for public services, but the second is that it can result in what many of us would see as a desirable policy change around freeing up more housing for owner occupiers rather than for second or holiday homes. What is the tipping point at which it becomes such a strong disincentive that we have a net loss of revenue?

No—boring is important in that regard. You saved me from getting into trouble there, so I thank you for that.

I will ask a similar question, which might result in a similar answer, on income tax. I will take us back to Daniel Johnson’s point about the difference between what you are projecting from raising the top rate, versus IPPR’s projections. If you are assuming that putting the top rate up by 1p will bring in only a net £3 million, I presume that, if we had increased it by 2p rather than 1p, we would have ended up bringing in less.

Grand.

Excellent—thanks.

My question might be best put to Richard Hughes, in the first instance. I am interested in hearing your thoughts on how appropriate the GDP deflator is as a measure of inflation for Government. At the moment, there is quite a gulf between the 3.7 per cent that it states, on the one hand, and, on the other hand, the consumer price index and retail price index levels, which are into double figures.

In the wider debate on the issue, it seems to be broadly recognised that neither method is quite right for measuring the impact of inflation on a Government, but the GDP deflator is the one that is used officially. I am interested in hearing your thoughts on how appropriate it is in the current financial context.

That is great—thank you. The context for asking that question is that we are all limbering up for another debate on Thursday about whether the Scottish budget has gone up or down in real terms, which depends entirely on how we measure “real”.

I have one final question, on the Scottish tax base. Income tax makes up the majority of our devolved tax base. As was just mentioned, the rate of growth in wages is currently far lower than inflation, but wages are certainly set to grow by far less than wealth—in particular, the wealth of the wealthiest people in our society.

Given that income tax is devolved and makes up the majority of our devolved tax base, and that the lion’s share of what is left is land and buildings transaction tax and council tax, are Scotland’s public finances overexposed to short-term shocks in the economy in comparison with UK-wide public finances, which can be supported by a much wider range of taxation measures on wealth or corporate tax, as was mentioned earlier?

It is not on that particular point, convener.

Thanks very much. Is there a measure that currently lands somewhere between the two, which might be a more appropriate one on which to base assumptions on the impact of Government spending?

Thank you—that is everything from me.