CBI warning of effect of tax increases in Scotland
The business group says it could create a 'chasm' between north and south
Business leaders are warning that Increasing income tax in Scotland risks creating a "chasm'' between north and south of the border which could make the country less competitive.
Ahead of the Scottish Budget next month CBI Scotland said that with the economy "remaining fragile'', it would "make it more difficult for our businesses'' if income tax and business rates were hiked up to higher levels than in the rest of the UK.
Finance Secretary Derek Mackay will set out his proposals at Holyrood on December 14 - with many expecting he will increase income tax charges for middle and higher earners.
But in a submission to the Scottish Government, business leaders at CBI Scotland stressed the need to "ensure parity of income tax and business rates regimes with the rest of the UK'', saying this would help support consumer spending and also help companies to attract and retain the best talent.
Tory finance spokesman Murdo Fraser said the CBI Scotland submission "makes clear in the strongest possible terms that Scotland cannot afford to have higher taxes than the rest of the UK''.
The business organisation is also urging Scottish ministers to bring forward work to improve Scotland's transport infrastructure as quickly as possible, and to set a target for spending on research and development from both the public and private sector as a proportion of GDP.
CBI Scotland director Hugh Aitken said: "With economic growth remaining fragile and uncertainty weighing on the outlook, Scotland desperately needs a Budget that will deliver for people and business - one that is committed to boosting productivity through strengthening skills, infrastructure and innovation.''
He argued: "Boosting Scotland's productivity is the only sure-fire way to grow our economy, generate the revenues we need for quality, sustainable public services and raise living standards across the board.
"These are goals we all share and business has a role in working with government to achieve them.
"On income tax and business rates, we simply can't afford for a chasm to open up between Scotland and the rest of the UK if we want to remain competitive.
"Variance across the UK would make it more difficult for our businesses to attract and retain talent they need and could make investors think twice about setting up shop here in Scotland. With inflation at a three year high and outpacing wage growth, we should avoid putting extra pressures on household incomes.
"Make no mistake, this Budget comes at a critical juncture for the Scottish economy. Moves which would make Scotland less competitive or less attractive must be avoided at all costs.''
However, Mr Fraser warned that the SNP administration "with the backing of Labour, seems intent on punishing hard workers and jeopardising the economy'' by increasing income tax charges.
The Conservative MSP said: "With new powers on taxation coming to Scotland, it should be an opportunity to boost growth and expand the tax base. Instead, the nationalists can only think to raid people's pay packets."