Scottish Chambers President issues stern warning to Sturgeon over income tax rises

Tim Allan, the President of the Scottish Chambers of Commerce last night issued a public, face-to-face warning to First Minister Nicola Sturgeon that widely predicted income tax rises in next week’s Draft Budget announcement risked long-term damage to Scotland’s international investment profile, and cautioned against careering towards tax rises in the absence of independent economic impact assessments that could have long lasting negative effects that could last for years.

The speech came a week before Finance Secretary Derek Mackay reveals his budget plans to Holyrood, in which he is widely expected to announce that he intends to use his powers over income tax rates and bands to increase taxes for higher-earning Scots in order to raise more money for public services.

Recent research carried out by Survation on behalf of the 38 Degrees campaign group suggested that 60 per cent of Scots would “personally be willing to pay more tax” if it was used to improve public services or tackle inequality - with only 15 per cent opposed.

However, speaking in his first Annual Business Address as the President of the Scottish Chambers of Commerce, which was attended by Ms Sturgeon, Mr Allan said: “Our concern is that, at a time of sluggish growth and faltering business investment, a competitive Scotland cannot afford to be associated with higher taxes than elsewhere in the UK. A high-tax Scotland would be easy to achieve but the damage could take years to repair.”

He continued: “Unless tax revenues were ring-fenced to drive growth and job creation, the cost for a small nation in terms of lost investment is incalculable. We want a level playing field on tax throughout the UK to keep Scotland competitive.”

Addressing the issue of Air Departure Tax, Mr Allan said: “We can’t hide our disappointment that the pledge to reduce and eliminate Air Passenger Duty in Scotland has been postponed, due to legal technicalities. The economic case has been made, accepted by Government, so let’s get on with it and remove this growth inhibitor to trade.”

On the continued negotiations between UK Government and the European Union, Tim said: “Business is clear that our priorities are to keep trading costs to a minimum, secure continuation of existing free trade areas and agree an acceptable transition period for business. With the continued delay in securing an outcome, many businesses are already implementing contingency plans and we impress upon our political leaders to work with energy, focus and momentum in securing a deal which is good for business and the economy.”

Continuing, he said:, “Every sector in Scotland needs to retain the immense talent we have from the EU and across the world. Businesses also need to plan and invest in our future talent pipeline and we need Scottish and UK Governments working together to devise a policy framework which enables us to attract and retain talent from around the globe and enable growth in Scotland’s economy.”

Elsewhere in his speech, Mr Allan praised the progress of the Chambers Network’s drive to promote international trade, which has seen individual Chambers lead trade visits to locations including Manhattan, Milan, Augsburg, Brazil, China, India, Dublin, Belfast, and Sweden.

In his address, he also announced a major trade mission to Scotland’s “beachhead” in China to the 100m-population Shandong Province, in April 2018, which he said would provide delegates with “solid and achievable trade relationships to explore” building on the SCC office which was opened in Yantai.

Elsewhere, Mr Allan outlined the SCC Network’s engagement with the skills and employability agenda, in partnership with Skills Development Scotland and the Developing the Young Workforce Programme, making an impassioned plea to Scottish business to engage:

“We need every business in Scotland, irrespective of size, to open up their doors and provide apprenticeships for our young people. The business community across Scotland must be accountable for opportunities for our youth.”