Intervention call

Business tells Holyrood ministers to use powers

Liz Cameron wants Nicola Sturgeon to take direct action

A business group has demanded the Scottish government takes a more pro-active approach to easing the cost crisis which threatens the viability of hundreds of companies.

Critics say Holyrood ministers have been too keen to call meetings of energy companies and pass responsibility on to Westminster rather than take direct action itself.

Earlier this week the First Minister called a summit of energy providers, but the only financial support that has emerged was £1.2 million, announced yesterday, that will be distributed to help agencies, including Advice Direct Scotland, Home Energy Scotland and Citizen’s Advice Scotland.

The Scottish Chambers of Commerce says Holyrood must use the powers it has, including pausing “burdensome regulations” – including proposed new taxes.

It wants direct financial support similar to the package provided during the Covid pandemic and a halt to changes to the rates appeals system, the new workplace levy and tourism tax.

The Chambers group says Scottish ministers should instigate a business rates revaluation and impose a moratorium on all policies that add to business costs for the rest of the parliament.

The Scottish Chambers reiterated demands made by the British Chambers of Commerce earlier this week calling on the UK government to cut VAT to 5%, introduce a price cap for SMEs, reverse the rise in national insurance contributions and review the the Shortage Occupation List (SOL) to help fill vacancies.

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Scottish Chambers CEO Liz Cameron said: “Since the start of 2021, businesses could see this crisis coming and have been consistently telling us that they are facing unsustainable rises in costs. The impact of these challenges on businesses, consumers and our communities must be tackled with immediate action.

“The scale of the crisis has reached a tipping point and with so many on the brink, we simply cannot afford any more inaction.

“From the UK Government, businesses need to receive emergency support for spiralling costs through grant funding, energy price caps and a reduction in VAT on energy bills. Urgent reform of the Shortage Occupation List is needed immediately to address labour market supply and skills shortages.

“The Scottish Government must also take action within its powers to alleviate the cost burden on businesses and households, including pausing burdensome regulations and providing direct financial support.”

Income tax options

Wylie & Bisset, the accountancy and business advisory firm, has suggested the Scottish Government Resilience Committee considers a review of Scotland’s income tax rates to help mitigate the impact of the cost-of-living crisis.

Chaired by the First Minister, the Scottish Government Resilience Committee has said it will consider urgently all options within devolved powers for regulatory action to limit increases in costs for people, businesses, and other organisations.

Wylie & Bisset tax partner Catherine McManus believes that leaves the door open for a review of the Scottish Rate of Income Tax.

The Scottish government can vary income tax rates from the rest of the UK on non-savings and non-dividend income.

It also has capacity to vary the thresholds on which the varying income tax rates are paid. Ms McManus says that, so far, these powers have largely been used to “disadvantage” Scottish taxpayers, whose rates of income tax on employed earnings are currently higher than the rest of the UK.

“Scottish taxpayers currently face greater income tax liabilities than taxpayers in the rest of the UK, so the question is whether the Scottish Government would consider bringing Scottish taxpayers back into line with UK wide rates, even if cut by a new Prime Minister, so that we have a level playing field across the country for employed taxpayers,” she said.

“Or perhaps the Scottish government could go a step further and use its regulatory powers to take Scottish taxpayers’ tax liabilities below the liabilities of taxpayers in the rest of the UK for the first time since it has had the regulatory powers to do so.

“At a time of widespread strikes, rising salaries and inflation at its highest rate in 40 years, the burden on Scottish taxpayers remains, for many, disproportionate to taxpayers in the rest of the UK.

“As such, if the Resilience Committee is serious about using all routes available to it to ease the impact of the cost-of-living crisis on individuals, a review of the income tax regime should be considered.”

See also: Ofgem tells new PM to act after price cap soars



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