Taxation plea

Retailers want ministers to curtail public spending

David Lonsdale
David Lonsdale: call to resist tax rises (pic: Terry Murden)

Retailers are calling for public spending restraint and disposal of under-used buildings, rather than tax increases to plug the Scottish Government’s projected £1 billion budgeting gap next year.

The Scottish Retail consortium says the number of public bodies could be reduced and changes made to key public services that would improve efficiency.

It calls for the Independent Budget Review undertaken by former Scottish Enterprise CEOCrawford Beveridge a decade ago to be “dusted down, to see whether the structural changes to public services and savings it identified ought to be implemented.

The NHS, for instance, could further expand the use of community pharmacy and opticians to reduce pressure on GPs and ensure healthcare provision is more accessible, says the SRC in a submission to the Parliament’s Finance & Public Administration Committee.

“Government premises surplus to requirements should be disposed of, and the policy of no compulsory redundancies rescinded,” it says.

It calls for a ‘multi-year plan’ to put government finances on a sustainable path with a “candid review of public spending and new thinking about how public services are provided”.

The SRC argues that a “more frugal approach to devolved public spending and a reduction in the cost of government” should form the bulk of the necessary budgetary action to close the fiscal gap, as this “would help militate against the need for tax rises which could stymie economic recovery”.

The retail industry is Scotland’s largest private sector employer, providing almost a quarter of a million jobs and accounting for a fifth of business rates paid.

However, Scottish retail is an industry in transition and recent data has shown a dip in retail sales, shopper footfall below pre-pandemic levels, and elevated levels of shop vacancies.

The written submission from the industry body notes that several new tax powers and charges have been introduced or are in the pipeline including workplace parking levies, changes to council tax, the tourism visitor levy, and charges on drinks containers and disposable coffee cups. First Minister Humza Yousaf is also considering a new income tax band.

The SRC argues that any further changes to Scottish income tax and council tax should take into account the impact on consumer spending and firms’ ability to attract and retain talent. It also wants ministers to accelerate plans to improve the competitiveness of business rates.

David Lonsdale, director of the SRC, said: “The Scottish Government faces a forecast £1 billion spending gap in the coming financial year and this is projected to widen in subsequent years. A timely spurt in economic growth would help but seems unlikely in the immediate term.

“Business recognises there are few palatable options for our politicians. However, retailers know all about having to cut their cloth in the face of spiralling costs, having dealt with a tsunami of hikes in commodity and supply chain prices over the past couple of years with various statutory burdens sprinkled on top.

“It matters profoundly that Scottish ministers succeed in reducing the cost of government otherwise taxes on households and firms might rise and the recovery and economic growth – which is already lacklustre – could be held back.”

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