Tories call on ministers to re-think income tax plans.

The Tories are warning Scottish tax policies could force firms to pay a supplement for keep skilled staff north of the border.

Published 13th Dec 2016

Scottish Government tax policies could force firms to pay a supplement'' to keep skilled staff north of the border, the Tories have warned.

The party will renew calls for ministers to rethink their income-tax plans in a Holyrood debate the day before Finance Secretary Derek Mackay reveals his draft budget for 2017-18.

With MSPs taking control over income-tax rates and bands from April, the SNP has said it will keep rates the same as in the rest of the UK but will not proceed with UK Government plans to raise the 40p higher rate of tax threshold to #50,000.

The Tories will use their parliamentary debating time to warn that higher income tax in Scotland could push companies to move.

The party highlighted a submission from chartered accountants Johnston Carmichael to Holyrood's Finance Committee which raised concerns that a divergence in tax rates could have an impact on the Scottish economy.

The submission states: Attracting and retaining individuals to work in Scotland will be costly for businesses if it becomes necessary to offer tax equalisation packages should the Scottish rates of income tax be higher than in the rest of the UK.

For some businesses where, for example, the workforce are skilled, this cost will be significant and may gave rise to business relocating elsewhere in the UK or indeed outside the UK altogether.

A number of our clients are flexible and ready to move should the costs of retaining a Scottish base become penal.''

Scottish Conservative finance spokesman Murdo Fraser said: The reality of the SNP's tax grab is that firms may end up having to pay high-quality staff a 'Scottish supplement' simply to persuade them to stay and work here. What kind of message does that send out?

As Johnston Carmichael make clear, if these costs get too high, many firms will conclude that they're better off moving to a part of the UK that actually welcomes employers - not one that punishes them.

The Scottish Government also needs to tell us whether it has examined the impact higher taxes could have on staffing in the public sector.''

A Scottish Conservative tax commission last year concluded tax rates in Scotland should be no higher than those elsewhere in the UK, and lower when affordable, in order to ensure Scotland stays competitive.

The commission's chair Sir Iain McMillan said: Our independent commission took evidence from across Scotland and came back with a clear view: if Scotland is to prosper and afford high-quality public services, we need to have a tax regime which grows the economy.

Setting higher tax rates here will only do the opposite, by deterring business, resulting in lower tax revenues flowing to the Scottish Government.''

A spokesman for Mr Mackay said: The Tories' bogus claims on tax are exposed by the fact Ruth Davidson wants to tax sickness and education by reintroducing prescription charges and tuition fees - while cutting the taxes of the richest in society.''