Scotland’s higher tax rates to be kept ‘under review’, says Kate Forbes


Scotland’s higher tax rates will be kept “under review” after businesses warned they were threatening economic growth, Kate Forbes has said.

A quarterly survey for the Scottish Chambers of Commerce (SCC) found taxation and recruitment had become the leading concerns for firms north of the border, overtaking inflation.

In Scotland, there are six income tax bands, double the amount in the UK, with all workers earning over £28,867 paying more in income tax than they would if they lived in England, Wales or Northern Ireland.

A Scottish resident on a salary of £50,000 pays £1,542 more while a worker on £100,000 pays an extra £3,346 per year.

The survey found that taxation concerned 52 per cent of firms, with SCC president Stephen Leckie warning that divergence between the Scottish and UK governments had exacerbated anxieties.

Before she returned to government, Ms Forbes also expressed concern about increasing income tax rates in Scotland, warning that “continually increasing taxes” was “counterproductive” as it would constrict the tax base.

“In terms of taxation more generally, we do need to keep it under review,” Ms Forbes, the Deputy First Minister, told the BBC.

“We have seen the figures from HMRC over the last few years show that there’s still more people coming into Scotland than leaving Scotland, which is important when it comes to recruitment.

“But we said from the moment that tax was devolved that we needed to keep the behavioural impact under review because we do want to attract people to Scotland. I take the comments that the chambers have made seriously.”

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The survey, of 410 businesses between May and June, found that recruitment difficulties increased from 47 per cent to 55 per cent compared with the last quarter, with labour costs affecting three-quarters of firms.

Mr Leckie said both governments must set out plans to address taxation fears.

He said: “Taxation continues to concern firms, to the extent that the issue has overtaken inflation as the leading concern.

“This is having a major impact in attracting and retaining talent in Scotland, contributing to the significant labour challenges many businesses are already experiencing. Divergence in personal taxation has exacerbated the issue.

“Businesses will be looking to both the Scottish and UK government to set out long-term plans to address the current state of taxation which is impacting growth, investment and talent.”

During the general election campaign, the SNP repeatedly championed its “progressive” taxation policy which it insisted had helped protect public services.

However, it won only nine seats, down from 48 in 2019. Scottish Labour, which has ruled out further income tax rises, won 37.

A UK Government spokesperson said: “It is for the Scottish Government to allocate their funding across their devolved responsibilities. They are accountable to the Scottish people for their decisions.”



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