SNP’s tax squeeze is deterring top talent

Financial giants’ staff fears

COMPANIES are struggling to recruit executives because Scotland has the highest taxes in the UK, industry chiefs have warned.

Representatives of banks, insurers and other financial giants have said that the latest widening of the tax gap between Scotland and the rest of the UK has moved the issue ‘beyond the tipping point’.

An industry survey also found 80 per cent of firms say tax divergence has led to them struggling to attract and retain workers.

Everyone earning more than £28,850 a year pays more income tax in Scotland than they would in other parts of the UK.

Since the start of this month, an ‘advanced’ 45p tax rate has been operational for earnings between £75,000 and £125,000, while the top rate was increased by 1p to 48p.

Sandy Begbie, Scottish Financial Enterprise (SFE) chief executive, said: ‘We are beyond the tipping point. The tone is one of divergence increasing further and that is also creating a negative backdrop to attracting people to Scotland.

‘People are saying, “If you want me to stay in Scotland”, or in some cases come to Scotland, “then you are going to have to compensate me for the increased tax”.

‘That adds costs for the business. If that tax regime is to continue in the direction of travel, you are going to start to see fewer senior jobs being based here.’

In the survey by SFE, which has 120 members employing about 100,000 staff, 80 per cent of respondents suggested the tax divergence introduced by the SNP Government is affecting their ability to attract and retain workers.

For top executives, 88 per cent of firms expressed concern about whether they would be able to attract and retain people, while for senior managers there was concern among 93 per cent of companies.

One respondent said: ‘The tax divergence is counterproductive and will lower the actual tax take by putting Scottish businesses at a competitive disadvantage and reduce the overall taxable profits of Scottish businesses.’

Another said: ‘As a business lead, I am now starting to have concerns raised over the Edinburgh location of my firm. Talent attraction at the senior levels is starting to impact the firm’s ability to grow.’

The Institute for Fiscal Studies also warned further tax rises will be needed if the Scottish Government continues to commit to ‘free’ universal services such as covering the cost of tuition fees, personal care and bus passes, which is costing more than £2billion a year.

The Scottish Government said: ‘Scotland’s tax policies carefully balance the need to raise revenues with the impact on taxpayers and the economy.’

‘Fewer senior jobs based here’