Businesses fear tax hike ‘deal’ will hit growth

THE SNP is being urged to resist demands for even higher tax hikes on middleclass families.

Business leaders yesterday appealed to ministers not to pile yet more pressure on Scots in order to secure the support of another party needed to get the Budget passed.

It comes as new figures show Scotland is heading for the lowest economic growth in the developed world.

The SNP plans published last month already propose increasing income tax rates for most workers earning more than £33,000 a year, to raise an extra £164million annually. Local authorities have also been urged to put up council tax by 3 per cent to bring in an additional £77million.

But the support of another party is needed to get the Budget through the first vote in parliament on Wednesday and the Greens – the SNP’s likeliest ally – are demanding at least an extra £157million for councils plus a real terms pay rise for public workers.

Last night, Scottish Retail Consortium (SRC) director David Lonsdale warned it was vital that consumers ‘don’t face a further hit to their wallet or purse through more hikes in income tax rates’.

He added: ‘Given anaemic official predictions for Scottish economic growth, we hope to see parliamentarians work collegiately to pass a Budget that prioritises measures which bolster private sector invest- ment and consumer spending.’ The SNP’s tax plans, unveiled in last month’s Budget, will shrink the pay packets of 757,000 Scots.

And the 1.1million people – 45 per cent of the workforce – who earn above £26,000 will pay more than those earning the same amount south of the Border.

The Conservatives yesterday highlighted figures from the independent Scottish Fiscal Commission that show GDP is projected to grow at 0.7 per cent in 2018, and 0.9 per cent in 2019. This would put Scotland at the bottom of the table of developed countries.

Scottish Tory economy spokesman Dean Lockhart said: ‘Despite ten years in power, the SNP has created a Scotland with high taxes and continuous low growth.

‘To quote the independent Fraser of Allander Institute, such low trends in economic growth for Scotland have not been witnessed in 60 years .... There can be no case for raising taxes while Scots are already paying so much and getting so little.’

The Scottish Government said: ‘We are absolutely committed to supporting business and growing Scotland’s economy, which is demonstrated by our £96million of extra support to deliver the most attractive business rates package in UK, with the increase to the rates poundage capped at CPI inflation.

‘Our income tax policy will also protect the 70 per cent of taxpayers who earn less than £33,000 a year and ensure they pay less tax next year if their income does not change. As a result of our draft Budget, Scotland will be the lowest taxed part of the UK for the majority of taxpayers.’

‘Scots already paying so much’