Shona Robison is this week expected to announce measures to tackle soaring business rates, support for skills training and an adjustment to income tax for middle earners.
The Scottish Finance Secretary faces some tough decisions in her budget that will mean cuts in the public sector workforce as she attempts to balance the government’s finances.
Although this will limit any chance of a pre-election “giveaway budget”, she will leave core services no worse off, while support for business will be tagged as helping to support growth and employment in the private sector.
As reported by Daily Business last week, it is expected that there will be an adjustment to income tax for those in the higher tax bands who include middle management and professionals such as teachers and accountants.
Writing for Daily Business this weekend, Donald Parbrook, a tax partner at the accountancy firm Azets highlighted an anomaly that is putting middle earners at a significant disadvantage to those earning the same salary south of the border.
“The higher UK threshold is aligned with the point that employees’ national insurance drops from 8% to 2%,” he said.
“The result is that in Scotland workers earning around £50,000 are losing 50% of their top slice of earnings (42% tax and 8% national insurance) while their English equivalent pays 28% with around £100 a month difference in net pay for that issue alone.”
Furthermore, he said: “The Scottish tax differentials also see an effective tax and NIC rate of 69.5% on a slice of income above £100,000 due to the way the personal allowance is tapered.
There is also speculation Ms Robison will confirm a review of the business rates revaluation process and request a pause by the valuer that could see it pushed back beyond the May election.
There have been widespread calls for action on business rates from dozens of trade groups, not least those in the retail and hospitality sectors. These calls have been louder since Chancellor Rachel Reeves announced a partial reprieve for pubs. The Scottish Chambers of Commerce has warned that viable firms are being taken “to the brink”.
Ms Robison, who is leaving Holyrood in May, is tipped to respond to pressures being faced in higher education and on the ability of colleges to deliver skills courses required by businesses. Some further funding is likely to be found to support colleges.
Her ability to get her final budget through parliament ahead of the election has been helped by Labour leader Anas Sarwar’s declaration that his party will not oppose the budget.
While he has been accused by the Conservatives of handing the SNP a “free pass”, he says he will reserve the right to amend or replace the budget if Labour wins the election.
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