Treasury boss warns SNP over tax gap risk to growth
SCOTLAND’S economy will suffer a further slump if the SNP widens the tax gap with the rest of Britain, a senior UK minister has warned.
Liz Truss, Chief Secretary to the Treasury, said the SNP’s decision to make people earning more than £26,000 pay higher tax than in the rest of the UK may have already put people off moving to Scotland.
She also warned Finance Secretary Derek Mackay that there will be ‘economic consequences’ if he widens the gap further in his Budget later this year.
She said: ‘Clearly, if you are a highly-skilled worker, tax is one of the things you are going to take into account about where you want to work. One of the issues Scotland is facing is attracting people to work in this country and, of course, having low tax rates is a key way of attracting highly talented people.’
Miss Truss, who met Mr Mackay last week, said the Scottish Government now has substantial powers to boost the economy, including tax, development and planning.
Asked whether she would be concerned if the tax gap with the rest of the UK grows following the next Budget, she said: ‘The reason the Smith Commission reported on, and we’re implementing, the fiscal framework is to give the Scottish Government that power and obviously it is up to them how they use that. But clearly there are economic consequences to having higher taxes. We know higher taxes are linked to slower rates of growth. ‘The UK Government remains responsible for the macroeconomic conditions of the whole UK and what I want to see as Chief Secretary to the Treasury is a growing UK across the board.’
Earlier last week the Fraser of Allander Institute said it is ‘vital’ for Scotland’s economy that Theresa May avoids a “no deal” Brexit.
Miss Truss said she remains ‘convinced’ there will be a deal but insisted Scotland could cope with a no deal outcome.
She added: ‘The fundamentals are very strong here in Scotland: a highly-skilled workforce and a good macroeconomic environment. So I am confident Scotland will succeed whatever Brexit deal we achieve, but clearly what we want is that good deal with frictionless trade and that is what we are aiming for.’
She also criticised Miss Sturgeon for demanding that opposition leaders back her call for Brexit negotiations to be extended if necessary to secure a deal.
Miss Truss said: ‘I think the last thing businesses need is more uncertainty.
‘What people want to see is a
‘Economic consequences’
deal to leave at the end of March next year. That is what all the businesses I have met in Scotland have told me.’
A spokesman for Public Finance Minister Kate Forbes said: ‘Liz Truss obviously hasn’t been listening to her boss Theresa May, who has made quite clear in recent months that she is ready to follow the SNP Government’s lead and ask the rich to pay a bit more tax in order to support vital public services like the NHS.’