SNP taxes: More pain for no gain
As the economy teeters on the brink of recession, experts warn Nationalists will make matters worse
‘Economy failing is unacceptable’
THE SNP’s tax plans could further damage Scotland’s economy and harm efforts to attract top business talent, experts warn.
The Association of Chartered Certified Accountants (ACCA) said making the country the highest taxed part of the UK – along with soaring business rates – will lead to ‘more challenging circumstances’ north of the Border.
The organisation warns that the Nationalists’ financial policies will leave taxpayers facing testing times as the UK begins Brexit negotiations with the EU.
The ACCA also claimed that the SNP’s stance on taxation and rates could damage the competitiveness of the economy.
The intervention comes as Scotland’s first homegrown billionaire, Sir Tom Hunter, branded the nation’s economic performance as ‘unacceptable’.
It was revealed yesterday that the Scottish economy contracted 0.2 per cent in the last three months of 2016, while the UK economy grew by 0.7 per cent.
If it is shown to contract again in the following three months, Scotland will officially be back in recession for the first time since 2012.
Finance Secretary Derek Mackay has tried to blame the Brexit vote for the downturn – but opponents have pointed out that the rest of the UK is performing better.
Yesterday, ACCA head of tax Chas Roy-Chowdhury warned that the SNP’s policies were likely to further harm national finances.
Scotland is now the highest taxed part of the UK following the Scottish Government’s decision to freeze the threshold for the higher 40p rate of income tax at £43,000 – even though it has risen to £45,000 in the rest of the UK. The change comes after Holyrood was given more power over taxation.
Mr Roy-Chowdhury also pointed to the business rates issue plaguing the SNP, which will mean firms across Scotland are forced to pay increases of up to 400 per cent. Mr Mackay introduced a cap of 12.5 per cent but the Scottish Daily Mail revealed this was inflationary and would be 14.75 per cent.
Mr Roy-Chowdhury said: ‘The start of the financial year represents a new era for the Scottish Government developing a more direct relationship between taxation and the economy, with greater power over revenue and expenditure than ever before. Yet the new powers also create further complexities, with those earning above £43,000 paying a higher tax rate than elsewhere in the UK.
‘Combined with rising rates for many small businesses, many Scottish taxpayers will be experiencing more challenging circumstances just as Brexit negotiations get under way.
‘Meanwhile, the potential for future divergences could harm the competitiveness of Scottish firms in terms of attracting top talent.’
He called on the SNP to ‘alleviate some of these pressures’ by looking again at their tax system to keep it ‘as simple as possible’.
Sir Tom Hunter yesterday said it was ‘unacceptable’ for the Scottish economy to have fallen behind the rest of the UK.
He said: ‘The Scottish economy is falling behind yet again, which is pretty unacceptable because it is only if we have a thriving economy that we can afford to pay for all the things we want – the health service, education, etc – so businesses have to be front and centre of any economy. We are a wee bit behind in Scotland now, so we need to fix that.’
The Scottish parliament’s increased power over taxation came into force yesterday, at the start of the financial year. But Scottish Tory finance spokesman Murdo Fraser claimed that instead of using the new powers to ‘deliver real growth’, they were a deterrent to investors and talent.
He said: ‘The SNP were given these huge new powers over tax that would give them an opportunity to deliver real growth. Instead, Derek Mackay’s decision to make Scotland the highest taxed part of the United Kingdom means the SNP is driving away top talent.
‘People are now becoming increasingly aware of the SNP’s clear anti-growth style of governing that frowns upon hard work.’
Last night, a Scottish Government spokesman said: ‘Where we have the powers to do so, we are making taxation fairer and more proportionate to the ability to pay, while raising additional revenue. Our income tax proposals for 2017/18 and beyond will protect lower income taxpayers and also generate extra revenue of £107million this year to invest in services.
‘This is achieved while ensuring that 99 per cent of adults will pay no more tax, given their current level of income, than in the last financial year.’