Murdo says “it is time” to consider lowering income tax in Scotland, following the results of a business survey which found that higher taxes have resulted in some firms struggling to attract and retain talent.
He was commenting on the latest Fraser of Allander Institute’s Scottish Business Monitor (SBM) for Q2 2024. This survey, which was conducted in May, gathered responses from more than 300 firms across various sectors of the Scottish economy.
Of the respondents, 17% experienced a ‘fair amount’ of impact due to the SNP Government’s income tax policy. The income tax divergence from England was made worse in April when the SNP Government decided that anyone earning more than £75,000 would fall into an ‘advanced’ rate of income tax, paying 45%.
Commenting, Murdo said: “I have raised this issue several times in the Chamber at Holyrood and the findings of this business survey reinforce my views on this matter. It is notable that the construction industry was found to be the most affected by the SNP’s income tax policy, with 27% of firms reporting a significant impact. I was also very interested to read that among the key issues identified were that many businesses said they are struggling to attract and retain talent, citing higher taxes as a cause of employee dissatisfaction, leading to increased wage demands and a reluctance to relocate to or remain in Scotland.
“The survey also found that some businesses perceive Scotland’s higher tax regime as a competitive disadvantage compared to the rest of the UK, with a few considering moving their operations or investments to England.”
Murdo continued: “These findings are very concerning but they tie in with what I have heard from many businesses in Scotland. The current high income tax bands in Scotland are a real burden for our financial sector and it is shown that they are deterring some businesses and prospective employees from moving to Scotland.
“I wholeheartedly agree with Sandby Begbie, chief executive of Financial Enterprise, who has said the high-income tax bands are leading to Scotland being a ‘dangerous place’ to be rich or create wealth, which is appalling. Our country badly needs economic growth and one of the ways to achieve this is by actually lowering rates of income tax and making it more attractive to come to work and live in Scotland. It is time to seriously consider this plan."
