Chamber and committees

I am a Highlands and Islands MSP, so I represent a huge part of rural Scotland. We have talked about housing in rural areas and about the importance of delivering health services—which are more expensive in such areas—as well as local public services, transport and so on. We have also talked about council services in Orkney, and the fact that my council tax bill will be going up. Perhaps starting with Mr Sousa, could the witnesses give me their thoughts on the impact in rural Scotland? Do you have any particular comments or concerns on that, given the difficulties that sometimes arise in delivering services there?

Thank you.

I am very conscious of time, so I will just ask about the tax issue. Professor Roy, this morning you were talking on the radio and highlighting the marginal rates. The marginal rate at £43,000 to £54,000 is 54 per cent, although I understand that that will come down. Obviously, we have talked earlier about the rate on £100,000 to £125,000 being almost up to 70 per cent. Would you comment or give us your concerns or thoughts on that?

This morning, João Sousa was talking after you on the BBC and he recognised that we will not know some of the tax implications of the budget for about two and a half years. He said that he had sympathy with you having to make forecasts, based on the difficulties.

We now have a number of bands and we have some marginal tax rates. We are not going to know the information for a while—how does that impact on your ability to forecast, and what are the dangers of that in terms of accurate forecasting?

For those two rates, we are looking at very different salary bands. Would we be more likely to see behavioural change in people who are in the lower band because a larger part of their income would be affected?

We talked about the behavioural changes that people can or cannot make, depending on their circumstances. If, for example, people on the higher rate are choosing to work less, choosing to incorporate or putting more into pensions, that means that money is potentially not being spent in their local economies. Is there any way of modelling that, or is there any way that that can be identified or forecast?

There is less flexibility.

I will come to that in a second. The model that has been used, the methodology for which has been developed by the Scottish Government, the Treasury and HMRC, is based, I think, on the VAT total theoretical liability model. Is that model itself part of the discussions?

On the basis of the need for a joint conclusion, what is the timescale for that work with the joint Exchequer committee? Obviously, it cannot be an open-ended, elongated process. There must be timescales to which you and colleagues are working.

We have covered a number of points today. I will go back to VAT assignment. Notwithstanding the concerns that have been raised by experts at last week’s meeting and by members today, is it still the Scottish Government’s ambition for VAT assignment to go ahead?