Kate Forbes on Scottish business relationship and income tax

The Herald Scotland

a day ago

The Scottish Government's relationship with the business community was sharply in focus at that point and, while the spotlight on this is probably slightly less intense, it is still bright.
Asked if she believed the overall relationship between the Scottish Government and business had improved over the last year, Ms Forbes replied: 'I think so. I mean, the first meetings I had when I became Economy Secretary was with all the business organisations one by one, to understand what their top asks were.'
Ms Forbes declared the Scottish Government had since then worked through the first programme for government, then the Budget last December, and now the most recent programme for government 'to try and deliver against those asks'.
She said: 'I think the business community understand that we can't do everything overnight, but we can either stop doing things that would otherwise have made the cost of business higher, or do things that lower the cost of business. The most recent programme for government led with economic growth and prosperity. So our sentiment, my sentiment is pro-economy, pro-prosperity, pro-business.'
Of course, the greater income tax burden for higher earners in Scotland relative to the rest of the UK has been very much in focus over recent years.
Ms Forbes said in the exclusive interview last June that this would be kept 'under review', taking into account 'how easy it is for taxpayers to shift'.
These comments appeared at the time to be a signal of the stance of the then new leadership team on this crucial issue, and that turned out to be the case.
Ms Forbes noted last week: 'The First Minister was very clear when he became leader that he didn't believe that you could continually raise income tax, and that we should provide certainty. And that's what last year's Budget delivered - the Budget announcement last year for this financial year. And the programme for government then built on that in May - being very clear that there wouldn't be further divergence from the rest of the UK on income tax for the remainder of this parliament.
'And the reasons for that is because certainty matters in a world that seems to be constantly in flux with lots of global headwinds and challenges of recruitment for businesses. The more certainty that we can provide, the better. And the only changes to income tax was essentially a small reduction for the basic and intermediate rate-payers because of the above-inflationary increase to the thresholds.'
Income tax would appear to be one of the key issues when it comes to what some in the business community think of the Scottish Government.
Asked about the reaction of business to the income tax stance, given this was an issue that had been highlighted previously, Ms Forbes replied: 'I think we have seen a lot of positive comments from the business community.'
Taking the previous comments from people in business about Scottish income tax at face value, you would certainly have thought they would have been happy that there has been no further divergence when it comes to the burden on higher earners north of the Border.
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Offering further thoughts on her perception of the reaction of business people to the stance on income tax since she took up her current roles and John Swinney became First Minister in May last year, Ms Forbes said: 'They have indicated that they feel the Scottish Government is listening, that they are taking any concern seriously and that we're on their side in navigating these choppy waters. Now, we obviously only…have limited powers over taxation.'
The Deputy First Minister has been heavily critical of the UK Government's decision to raise employers' national insurance contributions. This move, announced by Chancellor Rachel Reeves in her Budget last October, is aimed at raising about £25 billion a year.
Ms Forbes last week contrasted this national insurance move with the stance on income tax in the wake of the change at the top of the Scottish Government last year.
She said of people in Scotland's business community: 'What's really hit them hard this year was the increase to employers' national insurance contributions, which is essentially a jobs tax, and it was, for many of them, a total surprise because it hadn't been flagged in Labour's manifesto.
'So I think in that context, the more that the Scottish Government can do to provide stability and certainty, the better, and the strong signals from the business community is they feel they are getting that now from the Scottish Government.'
It will be interesting to watch how the relationship between the Scottish Government and business develops.
Ms Forbes also highlighted the importance of restoring confidence in the Ferguson Marine shipyard at Port Glasgow, which has been owned by the Scottish Government since 2019.
She said: 'I have been crystal clear that Ferguson Marine's future relies on them being able to competitively bid in the open market for new work.'
And, in one of many attention-grabbing comments, Ms Forbes added: 'I would like to think that all parties in the Scottish Parliament want to see Ferguson Marine succeed and survive, which is why we need to build confidence, not knock it.'