Business leaders issue tax warning
Finance secretary Derek Mackay was warned against “opening the tax floodgates” by business leaders yesterday after his budget was passed at Holyrood yesterday.
Mr Mackay’s spending plans are underpinned by an overhaul of the tax system that will see higher earners pay more and lower earners pay slightly less.
Business leaders have warned the Scottish Government against “opening the tax floodgates” after MSPS backed next year’s budget at Holyrood.
The 2018-19 spending plans are underpinned by a major overhaul of the tax system which will mean increases for higher earners in Scotland. Lower earners will pay slightly less.
The Scottish Government has said 70 per cent of Scottish taxpayers will pay less than they did last year, while about 55 per cent will pay less than they would if they lived elsewhere in the UK.
Finance Secretary Derek Mackay said the budget plans will raise an extra £200 million to fight austerity and support public services.
He told MSPS the tax rises were being done “in a fair and proportionate way which will deliver hundreds of millions more for the public services of Scotland”.
But Andy Willox, policy convener of the Federation of Small Businesses Scotland, said: “This Budget breaks new ground, and, in these economically uncertain times, it must not open the floodgates to a host of Scottish supplements, charges and levies.
“While there’s much in the Budget to be applauded, a clear majority of those in business are against moves to change Scotland’s income tax.”
The budget includes changes to Scotland’s income tax rates and bands.
The new five-band system, which was approved in a separate vote on Tuesday, creates a 19p “starter” rate for lower earners and a 21p “intermediate” rate for earnings of more than £24,000.
The higher and additional rates will also be increased to 41p and 46p respectively.
Liz Cameron of the Scottish Chamber of Commerce said the tax changes come as firms are facing widespread recruitment problems.
She added: “We would question any changes to the tax system which have the potential to further exacerbate this issue, as well as unintended knock-on consequences, which may arise from Scotland being seen as less competitive than the rest of the UK.”
The budget was passed after the minority SNP Government struck a deal with the Greens.
Conservative finance spokesman Murdo Fraser said the SNP had broken a manifesto promise not to increase the basic rate of income tax.
“While taxes are going up, services are being cut,” he told MSPS.
“This is a Budget which should have put growing the economy first … Instead it is a Budget for cuts in public services and higher taxes.”
Labour had argued for greater tax rises for top earners, pushing for a 50p top rate to be introduced.
Its finance spokesman james Kelly said: “We need bold and radical action in order to address the issues that we face across the country. This is a Budget that fails to address the scandal of child poverty and cuts to public services. This is a Budget that lets people down.”