‘Don’t raid cookie jar’, CBI warns SNP on tax
BRITAIN’S biggest business body has pleaded with SNP ministers to avoid widening the tax gap between Scotland and the rest of the UK.
Finance Secretary Derek Mackay will reveal his Budget next week.
But he has already indicated that he will not match Chancellor Philip Hammond’s decision to ease the tax burden on hard-working families by increasing the higher rate threshold to £50,000.
The Confederation of British Industry (CBI), which represents 190,000 businesses employing seven million staff across the UK, said widening the tax gap will damage the economy, hamper investment and strangle consumer spending.
CBI Scotland director Tracy Black said: ‘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.
‘Supporting the private sector to deliver growth, jobs and prosperity is 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.’
In his Budget, the Chancellor announced the threshold for paying the higher rate of income tax – set at 40 per cent in the rest of the UK – would rise to £50,000 next April.
In Scotland, workers pay the higher rate – set at 41 per cent
‘Firms will be concerned’
– on earnings over £43,430. The Scottish Government has only committed to increase the tax thresholds by a maximum of inflation when it sets its Budget, which means the tax gap is almost certain to widen further.
At present, everyone earning more than £26,000 pays more income tax in Scotland than in other parts of the UK. Mr Mackay has already told MSPs Mr Hammond’s tax plans were ‘not fair, not right and not progressive’.
In a submission to the Scottish Government, CBI Scotland said: ‘While income tax will be the most significant source of funding for public services, it is also an important determinant of economic activity through its impact on consumer spending.
‘The Scottish Government needs to use the levers at its disposal to help wage growth and not dampen it further.’
It said while 40 per cent of firms want to increase wages, the effects are ‘likely to be limited’ as consumer spending remains under pressure.
Scots Tory finance spokesman Murdo Fraser said: ‘The SNP has been given an enormous financial boost in the form of £950million extra to spend from the UK Budget.
‘With these extra resources, it is vital that the SNP Government listens to these calls from the CBI and implements a tax regime which supports business and the economy.
‘The time for excuses is over. The SNP must listen to business and re-energise Scotland’s stagnant economy.’
A Scottish Government spokesman said: ‘Following changes introduced earlier this year, more than twothirds of taxpayers will pay less on their current income this year.
‘The changes mean an additional £428million will be available in 2018-19 to invest in public services and the economy.
‘We look forward to working with CBI Scotland to ensure we have a skilled and productive workforce in future.’