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Scottish Budget

CBI urges Mackay to avoid more tax divergence with UK

Tracy Black

Tracy Black: ‘there’s only so many times you can raid the cookie jar’ (pic: Terry Murden)


 

Business leaders have warned Scottish Finance Secretary Derek Mackay that any further divergence in income tax between Scotland and the rest of the UK could inflict damage on the country’s competitiveness.

CBI Scotland says measures to ensure competitiveness should form the centrepiece of the Budget which will be presented a week today.

In its submission to Mr Mackay’s statement it calls for tax policies that will encourage migration and boost productivity.

The CBI says Scottish businesses are adamant further divergence between Scotland and the rest of the UK on income tax could significant dent Scotland’s ability to compete for talent and investment, causing-long term damage to prospects for the economy.  

CBI Scotland director, Tracy Black said: “For the past couple of years, the CBI Scotland message for the Scottish economy has been a clear one: address weak levels of productivity and safeguard Scotland’s competitiveness.

“Alongside avoiding a catastrophic no deal Brexit and the untold damage that would do to the economy, this remains the key priority for Scottish firms as we approach the Scottish Budget.




“By supporting exporters and helping firms upskill and retrain employees, it’s clear the Scottish Government has listened to business on productivity.

“On Scotland’s competitiveness, firms feel less confident. Income tax could become a major issue for companies keen to attract the best talent. Following the UK Budget, Scottish firms will rightly be concerned about their ability to compete with rivals across the UK in the event of further divergence.

“We all want to see a Scottish economy firing on all cylinders, yet there’s no escaping the fact that hard choices lie ahead.

“Supporting the private sector to deliver growth, jobs and prosperity remains the best option to boost the country’s coffers and ensure public spending is sustainable.

“One off tax raids may look appealing but there’s only so many times you can raid the cookie jar.”

CBI Scotland’s Budget submission outlines a number of business priorities for the Scottish Government, including:

  • Skills – the foundation for a competitive, productive economy and a resilient and fulfilled workforce
    • Short term: Double the Flexible Workforce Development Fund and allow greater flexibility of delivery to support upskilling of current workforce
    • Medium-term: Work with business to highlight the importance of ensuring the post-Brexit UK immigration system works for the Scottish economy
    • Long-term: Commit long-term resource to the National Retraining Partnership to help businesses and workers prepare for technological change 
  • Business investment depends on a competitive environment with a clear and stable approach to taxation
    • Short-term: Halt plans to impose additional levies through non-domestic rates on out-of-town businesses
    • Medium-term: Following the UK Budget announcement, give business certainty by committing to no further changes on income tax levels in comparison to the rest of the UK
    • Long-term: Use Scottish National Investment Bank to encourage greater patient capital investment by pension funds to support infrastructure development 
  • Boosting productivity is a shared challenge which requires business and government working in partnership to strengthen the economy
    • Short-term: Work with business to increase exports by building on the strength of existing exporters and financially support them to increase efforts
    • Medium-term: Challenge businesses to invest in innovation by committing to an ambitious joint target for public and private R&D spend to reach 3% of GDP
    • Long-term: Help business support more women back to work through more flexible childcare support in the first years from childbirth



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