Mr Fraser says there are those that say rises in income tax are justified because there are better public services in Scotland.

The Tory MSP says the benefits in Scotland's public services already exist before the tax rises because of the Barnett formula.

Mr Fraser says the government want to tear up the Barnett formula by taking Scotland out of the UK. 

Mr Fraser says the SNP talks left but they are afraid to go to higher taxation.

The Tory MSP cites the "grubby budget deal stiched up with the Greens that increased the tax differential".

SNP MSP John Mason says a tax differential within Switzerland and the USA to no detriment.

Mr Fraser says he is disappointed with Mr Mason as he used to argue for lower taxes.

Tory MSP Murdo Fraser says this is a historic moment with parliament having income tax powers. 

Mr Fraser says his party will oppose the rates resolution and that the government are making the wrong decisions. 

The Tory MSP says the finance secretary said changes will only affect 10% of the highest earners but it is just over 14% and it doesn't just affect the "mega rich."

Image source, bbc

Mr Mackay says if the Scottish government were to match the proposals down south it would lose an additional £107m.

He says if the parliament was to fail to pass a Scottish RatesResolution then the consequences would be dire.

Finance Secretary Derek Mackay says now is not the time to add to the burden of taxpayers in times of austerity as Labour would.

Scottish Lib Dem Leader Willie Rennie asks if he is not a bit disappointed that he has missed the opportunity to invest in public services by increasing income tax. Mr Mackay says the government are investing in public services and raising the basic rate of tax passes on austerity.  

"That is why we have chosen to freeze the basic rate of income tax," he says.

Image source, bbc

Mr Mackay says tax powers are not a political toy and they have an impact on individuals that must be considered very carefully.

The finance secretary says income tax policy must deliver the revenue it raises which is why raising the additional rate of income tax was not followed.

He says the government is delivering alternative policies to support those on the lowest income, for example by council tax reforms.

The minister says the government remains absolutely committed to the living wage.

The Scottish budget was voted through the first stage of the legislative process earlier this month after a deal between the SNP and Greens.

MSPs backed Finance Secretary Derek Mackay's tax and spending plans by a margin of 67 to 59.

A deal was struck with the Greens totalling £220m of extra spending, including £160m for local authorities.

The deal will also see the threshold for the 40p rate of income tax frozen at £43,000.

The same threshold is being raised to £45,000 in the rest of the UK, so the move means higher-rate tax payers elsewhere will pay up to £400 less tax every year than people earning the same wage in Scotland. The Scottish government had originally planned to raise the threshold only by the rate of inflation.

Green co-convener Patrick Harvie told MSPs that his party had secured "the biggest budget compromise in the history of devolution in Scotland".

• Look back on the budget debate and vote
• Brian Taylor blogs on the budget deal

Scottish Greens Co-convener Patrick Harvie intervenes to asks if the finance secretary is not pleased in "his heart of hearts" that the Scottish Greens persuaded him not to give a tax cut to the highest paid in society.

Finance Secretary Derek Mackay says he will say what he is pleased about and that is that the Budget Bill looks set to be passed this week. 

Image source, bbc

Last December a Scottish parliament debate about tax ended in stalemate after no party was able to win a majority of votes.

MSPs were talking tax ahead of the government's draft budget on Thursday.

The Tories put forward a motion opposing the SNP's plans, which would not replicate a UK government tax cut for high earners.

Amendments from all parties, including one from Finance Secretary Derek Mackay were rejected in a series of votes, before the motion itself also fell.

As a minority government, the SNP would need to win support from at least one party to back its budget.

However, there was no consensus on show at Holyrood following the tax debate.

There will be a formal vote on the government's tax proposals prior to the final vote on the budget in February, so both the tax plans and the budget itself will need to win backing.

• Look back on the finance debate on Holyrood Live

Image source, bbc

Finance Secretary Derek Mackay says if MSPs fail to agree to the rates and bands that will cost £ 11.9bn in Scottish income tax.

Mr Mackay says the Scottish Rate Resolution must be agreed to before the budget can be passed.

He says he has been determined to stay to the SNP's income tax proposals.

Here is Finance Secretary Derek Mackay's motion. 

Image source, Scottish Parliament

Image source, PA/Getty Images/ Scottish Parliament

The Scottish government will now lead an historic debate on the Scottish Rate Resolution, which will allow MSPs to debate and then vote on all income tax rates and bands to be set in Scotland for the first time.

Scottish Lib Dem Leader Willie Rennie says the government previously voted against his party's recommendations.

Mr Rennie asks where the money has been found.

The finance secretary says that capping is the approprate way forward and that the complexities are contained in the SPICe information.

Mr Mackay says he is happy to engage with other parties. 

Image source, bbc

Green MSP Andy Wightman asks if there should be more scrutiny over the rates regime.

Mr Wightman asks if there will be any change to the local government settlement.

Mr Mackay says he is happy to confirm there will be no negative impact to that budget.

Image source, bbc

Mr Mackay says putting in place a cap supports businesses without punishing others.

He says revaluation lasts for five years and the government is waiting for the Ken Barclay review.

The minister says the government will then be better informed with the actual evidence.

Labour MSP Jackie Baillie says she is "positively dizzy" by the speed of the u-turn.

Ms Baillie says rates rise would have led to job losses and this is something no one wants to see.

She asks if this package is simply for one year and "we face a cliff edge next year."

Has it "been found down the back of a sofa?" She asks.

She asks what assistance will be provided to RNHS.