Chamber and committees

My next question might be best directed at Professor Muscatelli, as our domestic expert. Do you have any views on whether the Government is using its existing capital borrowing powers effectively enough? I acknowledge that they are extremely limited. Have you looked at whether they could be better used?

I will switch to the issue of tax and your recommendation on continuing to make the tax system more progressive. Do you have any views on the papers that were recently published by the Scottish Trades Union Congress and the Institute for Public Policy Research, which largely focus on the introduction of new tax powers? Both papers included proposals on changes to income tax, non-domestic rates and so on, but they focus primarily on creating new powers, particularly around property taxation, which you mentioned, Professor Muscatelli.

I am conscious of the time, so I will roll in a second question specifically on the higher tax band. Is the range in the higher tax band now too large? For example, should we tax people who earn between £45,000 and £60,000 at the same rate for that portion of their income as we tax that portion of income for those who earn between £100,000 and £125,000?

I return to the point about capital powers and your recommendation for the Scottish Government to maintain capital spend. Professor Muscatelli acknowledges the Government’s limitations when it comes to capital borrowing, so I want to understand a little bit better how you think that the Government can maintain capital spend when the capital budget is largely set for it through the settlement from the UK Government. You might think that the limited capital borrowing powers are not being used well enough or that we could increase taxation further to increase the capital budget, or it could be a question of reallocation within capital because there is a belief that some capital spend is not efficient enough and we could get more bang for our buck through reallocation. Could you expand a little bit on how you think the Scottish Government could achieve what you recommended, given the limitations that you have acknowledged?

Given that that change takes place immediately, to avoid a very obvious bit of avoidance that would otherwise have taken place, do you have a projection for what the additional income will now be in quarter 4 of this financial year?

I have a final question, which is just to jog my memory. How did the eventual outcome to the 2018 changes to income tax across the board compare to the behaviour change assumptions that were made at the time?

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.