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SCC response to the Budget statement

Posted: 18th March 2015

Commenting on the Chancellor’s Budget Statement, Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:

“This Budget is one of significant contrasts for businesses in Scotland.  There is some very good news for some of our key industries such as the oil and gas sector and our drinks industry, yet there are also some significant omissions and missed opportunities to deliver timely support to our tourism sector and our ambitions to become a more export-minded economy.  It is clear that our economy as a whole has made significant progress from the dark days of the recession and there is a strong pro-business focus from this Budget but action on VAT on tourism and Air Passenger Duty would have been necessary for us to provide a resounding endorsement.”

Mrs Cameron went on to comment on specific aspects of the Budget:

On oil and gas taxation:

“The Chancellor has responded positively to our calls on behalf of the industry and cut the Supplementary Charge from 30% to 20% and has delivered wider benefits by cutting the rate of Petroleum Revenue Tax from 50% to 35%, which will relieve the tax burden on older fields.  These measures were necessary to reflect the challenges facing the oil and gas sector in Scotland resulting from the prolonged low oil prices.  Together with a simplification of the tax allowance regime, this must be the start of a process to develop a strong and coherent fiscal plan for the North Sea that will help to ensure that Scotland and the UK continues to benefit from our natural resources in the long term.”

On annual investment allowances:

“It is welcome news that annual investment allowances will not revert to £25,000 in 2016, as had been feared.  This is important at a time when businesses are still in the early stages of returning to a platform of investment that is necessary to sustain our economic recovery and should give businesses the confidence to invest over the coming year and beyond.  It would have been better for the Chancellor to have indicated the level of allowance that will instead apply in 2016 but we will look for further clarity on this in the Autumn Statement.”

On City Deals:

“The Chancellor confirmed that discussions would begin on City Deals for both Aberdeen and Inverness.  We believe that these cities are prime candidates for this type of long term capital investment and we look forward to swift progress and delivery.”

On Self-Assessment Tax Returns:

“The abolition of the annual self-assessment tax return and its replacement with new digital tax accounts could herald a welcome simplification on the administrative burden felt by many small businesses.  If teething troubles can be avoided, this could be a major improvement and modernisation of the system.”

On Alcohol Duty:

“The reduction in duty on beer, cider, whisky and other spirits is a very welcome boost to some of Scotland’s strongest growing and most innovative businesses and sends out a clear message that we value the contribution that these businesses make to our economy.  In addition to the established whisky industry, Scotland is at the forefront of the rapidly expanding craft beer sector and these duty reductions will help these industries to prosper.”

On Air Passenger Duty:

“This was a missed opportunity for the Chancellor to shortcut the impending demise of this tax through a series of devolved cuts by axing it once and for all.  Many of our competitor nations have already abolished similar taxes because they recognise that it a tax on internationalising business.  The UK must abolish this tax sooner rather than later and this is a campaign we will take to our politicians throughout the General Election campaign.”

On VAT on Tourism:

“Scottish Chambers of Commerce has long believed that a reduction in the rate of VAT chargeable on accommodation, tourist attraction admission and restaurant services to 5% is essential if we are to compete effectively with other European nations which have already gone down this route.  Last year was a triumphant year for Scotland’s tourism industry and it deserves to be supported to ensure that it can make the most of the opportunities that now exist.  It is very disappointing that the UK Government has not yet acted upon this need and it essential that it changes direction on this quickly if we are to take full advantage of the exceptional potential for growth that currently exists in our tourism sector.”

Business Comment

Business Comment is the Edinburgh Chamber of Commerce’s bi-monthly magazine. It provides insight on Edinburgh’s vibrant business community, with features on the city’s key sectors, interviews with leading figures and news on new business developments in the capital.
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