With three weeks to go until the UK General Election, one of the most important issues for Scottish businesses will be the next Government’s approach to taxation. This week, Scottish Chambers of Commerce has called for the new administration’s first Budget to take decisive action to reduce key taxes to ease the burden of business costs and promote investment and growth. Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:

“With Scottish businesses facing the prospect of rising inflation and weak consumer demand, the threats to our economic growth, which lags behind that of the UK as a whole, are readily apparent. However, Government has the opportunity to develop policies which will help shape a more fruitful business environment where businesses are freed up to invest for new opportunities, future growth, and new jobs.

“One of the current challenges many businesses are facing is that of rising costs through higher prices and through government legislation on pensions, the National Living Wage and the Apprenticeship Levy. By tackling some of businesses’ fixed costs, this could help to free up valuable resources for business investment and job creation.

“That is why we believe that the UK Government must target reductions in business rates, rather than Corporation Tax, in order to produce the biggest boost to the largest number of businesses. Whilst this is a tax that is devolved to Scotland, clear strategic action on business rates in England would assist the Scottish Government in delivering long overdue restructuring of this tax north of the border.

“At a national level, a temporary reduction in the rate of VAT, last implemented in 2008-09, may also be a useful tool to tackle rising costs, whilst at the same time encouraging a boost in consumer demand, which has been the major driver of growth in the Scottish economy. In addition, the permanent reduction in VAT to 5% for tourism and hospitality activities would bring the UK into line with the vast majority of other European nations and deliver a timely boost in competitiveness to one of our most important and iconic sectors.

“A closer and more productive working relationship between the UK and Scottish Governments could also make possible co-ordinated action between reserved and devolved activities, for example to incentivise and reward in-work training through the National Insurance Contribution system. Scotland may have two Governments but they must work together more effectively to deliver the right results for business.”