Ewan MacDonald-Russell: Our wish list for Derek Mackay

Will Derek Mackay provide retailers with some festive cheer? Picture: Steven Scott Taylor
Will Derek Mackay provide retailers with some festive cheer? Picture: Steven Scott Taylor
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The Chancellor’s Autumn Statement showed just how challenging the next few years will be for the economy.

Lower economic growth, higher inflation, political uncertainty, and squeezed household incomes mean January’s chill will hit even harder.

Retailers are having to work even harder to have a successful Christmas

Ewan MacDonald-Russell

However, while a good Christmas can help keep the cold away for a little longer, especially for retailers, this week provides Finance Secretary Derek Mackay with the chance to set a course that can keep Scotland away from the worst of the economic weather. If he can resist the siren calls to make short-term tax rise decisions, this first budget of the new ­parliament can point the Scottish economy away from the rocks and towards the calmer waters of ­sustainable growth.

READ MORE: Warning over Scotland’s ‘uncompetitive’ business rates

That starts with sticking to the SNP manifesto commitment not to raise income tax rates. A 1p rise in income tax – as proposed by some MSPs – would leach £475 million out of the economy. That’s on top of council tax changes ­taking up to £170m out of consumer spending next year.

That’s hard on households potentially facing ­significant inflationary pressure. Just as importantly, money lost to higher taxes can’t be spent on the high street. That doesn’t just affect retailers but suppliers including Scottish manufacturers, shop-­fitters, logistics firms and farmers, as well as other consumer-facing sectors such as tourism, leisure and hospitality. All of these workers pay the income tax the Scottish Government needs.

However, there’s little point keeping costs down for customers if the burden is pushed onto business. For too long that’s been the Scottish Government’s approach. Business rates long ago surpassed council tax as the major source of revenue. Those rates increases correlate with 1,644 shops closing over the last seven years, and the loss of 10,000 retail jobs.

That was exacerbated by last year’s decision to double the large business supplement. Increasing business rates for one in eight firms was a short-term measure that is only making life harder on the high street. It’s time the Finance Secretary admitted that and reversed the rise. He should also outline what steps he’ll take to help businesses through the Apprenticeship Levy revenues and what measures the government will take to invest in infrastructure.

Finally, whilst most of us enjoy a surprise or two at Christmas, that’s not the case when it comes to business and budgets. Scottish ministers have made an unfortunate habit of slipping in extra tax rises on retailers, like the business supplement increase. This year, when retailers are having to work even harder to have a successful Christmas, we would ask the Finance Secretary to read our Christmas list, and this year give us what we’ve asked for. It doesn’t even have to be gift-wrapped.

• Ewan MacDonald-Russell is head of policy at the ­Scottish Retail Consortium

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