Mr Mackay’s budget may prove burdensome to hard-pressed businesses

Between the Lines David Watt

Scotland’s economy and businesses face a time of literally unparalleled uncertainty and political confusion. It makes planning nearly impossible, and so the concern of potential added costs to business announced in yesterday’s Scottish budget is worrisome.

It was positive to see that finance secretary Derek Mackay has not increased business rates, as unfortunately, there is often a belief that business will just pay more without making too much of a scene.

However, this is absolutely not the case, and in fact is seriously wrong and dangerous. Increased business costs mean increased prices, and that threatens jobs.

We can see this purely by looking at the impact that increased business rates has had on our high streets (although yesterday’s budget has promised some levity for town centres with funding being made available).

Politicians must be sure that every penny spent is necessary, and ensure it is being expended effectively and efficiently.

Only once this has been done can government attempt to raise more money from the business community or individuals.

Income tax rises, especially aimed at the “rich”, seem to be an easy target for politicians and a guaranteed, consistent source of income. But this is naïve as those classed as “better off ” are far more mobile and can move; they are better at tax efficient measures.

We can look across the world to see evidence of tax avoidance; if individuals believe they are paying too much tax and there is no perceived public benefit, then they will find ways to avoid paying it.

As Mr Mackay said in his speech to the Scottish Parliament yesterday afternoon, we all want Scotland to grow and prosper economically.

However, higher taxes are not the way to do this.

Too often, they just divert money into often inefficient public services.

Let’s be much braver and look at the spend first – at a root and branch level – and then create a realistic, fair taxation system.

● David Watt is the executive director of the Institute of Directors (IOD) Scotland