SCOTTISH Chambers of Commerce approached this year’s Budget statement looking for action on three key objectives: addressing the current and future pressures on our oil and gas sector, improving Scottish businesses’ access to overseas export markets and ensuring that our tourism sector is able to take full advantage of the spectacular successes of 2014.
Measured against these targets, the Chancellor scores just one out of three but, in his favour, he has also taken a number of additional measures to assist Scottish businesses which help to even the balance in what was a mixed bag of a pre-election Budget.
The big win for Scotland was, of course, the decision to reduce the supplementary charge on oil and gas production from 30 to 20 per cent, in line with our network’s demands.
Of course, that should have been done at the time of the Autumn Statement in December, though, to be fair, the Chancellor has backdated the tax cut to the beginning of January. In addition, he has cut the rate of petroleum revenue tax from 50 to 35 per cent, further reducing the headline rate of tax on older fields.
These tax cuts are important in themselves but are truly significant if they herald a fresh approach to the North Sea fiscal regime. The real goal is to redesign the system of tax and allowances to ensure that this forms part of a long-term integrated strategy to deliver the maximum economic benefit from our oil and gas resources and to secure a sustainable future for businesses in this sector, which provide jobs not just in the North-east but right across Scotland.
Our major disappointments were that the Chancellor failed to mention either air passenger duty (APD) or VAT in his speech. Both of these taxes make Scottish businesses less competitive than those in rival economies, particularly in Europe where countries such as Ireland and the Netherlands have abolished APD and the likes of France, Germany and Italy apply a lower rate of VAT for tourism-related activities. Failure to act on these damaging taxes really is a missed opportunity, particularly given the longer-term revenues that could be raised by the Treasury as a result of increased business activity.
On a practical level, the replacement of self-assessment tax returns with new digital tax accounts has the potential to make life easier for many small businesses, while a commitment not to reduce the annual investment allowance back to £25,000 next year is welcome, even if we have to wait until December to find out the new threshold.
There is also good news for our drinks industry in the shape of lower taxes on spirits, beer and cider, helping to boost both the iconic whisky industry and the range of small, rapidly growing craft breweries that Scotland is home to.
On balance, I think that this was a good Budget for Scottish business but it leaves room for considerable improvement – a fact we will be reinforcing with politicians of all colours in the weeks to come.
• Liz Cameron is chief executive of Scottish Chambers of Commerce
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