Scotland’s budget ‘is insufficient’ for business

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There were mixed reactions to yesterday afternoon’s Scottish budget for 2022/23, with many welcoming continued corporate rate relief, while saying the support measures did not go far enough.

Kate Forbes said the 50% discount on retail, hospitality and entertainment rates will continue for the first three months of next fiscal year, while small businesses pay nothing.

The Finance Secretary also confirmed that her budget offered the UK’s lowest non-domestic rate weight, at 49.8 pence, on top of the UK’s’ most competitive annual package worth 745 million pounds ”.

However, the Scottish Tax Commission report suggests companies will still end up paying around £ 720million more in commercial tariffs next year.

David Lonsdale, director of the Scottish Retail Consortium, said: “The three months of relief will prove to be beneficial for smaller businesses, however, the applied cap means ministers have taken the opportunity to lower tariff bills. medium and large retail chains. who are not only essential to the health of main streets and city centers, but which pay the lion’s share of commercial retail rates and employ most of the staff.

“That, along with the reinstatement of full commercial rates from July and the reinstatement of the higher property surtax, means that we are not convinced that the measures are sufficient.

“Indeed, the decision not to be bolder may well have to be reconsidered if trading conditions do not improve.”

Stephen Montgomery, spokesperson for the Scottish Hospitality Group, said the rate relief would be useful for a short time for some hotel companies – but the cap “cripples a lot” and significant cost challenges for hospitality will not take end by next summer.

“It is a fact that Scottish hotel companies are facing rising costs – with inflation, supplier price increases, debt levels and other costs rising in our industry.

“The end of rate relief next year takes away a vital respite and could spell the end of many hard-pressed Scottish hotel companies.”

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Sectors not included in the tariff relief were quick to complain, however.

Scottish Property Federation President Kevin Robertson said: “The budget offers temporary relief to some of the businesses hardest hit by the pandemic in the retail, hospitality and leisure sectors.

“However, that doesn’t go far enough to support companies in other industries entering a new year of corporate rate liabilities based on pre-pandemic activity levels.

“The Scottish government has missed an opportunity to make commercial rates in these places more sustainable by resetting the tax base and encouraging much needed investment.”

Tracy Black, director of CBI Scotland, said Scottish businesses had little reason to be excited about a statement more focused on social spending.

“Increasing funding for employability is clearly a step in the right direction, but much more detail is needed on how skills funding will help businesses meet the immediate challenges.

“Ultimately, more ambition is needed in skills development and retraining if we are to ensure that workers have the skills they need for a modern economy.”

In his statement, Forbes admitted that “there are few challenges as acute as labor shortages”, adding that the government will invest more than £ 225million in Skills Development Scotland to support a range of jobs. ‘national training interventions.

There was also £ 23.5million pledged for a green jobs fund, while the first £ 20million of a 10-year £ 500million just transition fund for the North East and Moray have been confirmed.

It includes £ 366million for energy efficiency and renewable heat, as well as £ 60million for large-scale thermal decarbonization projects and a £ 53million investment in a range of industrial decarbonization projects – with £ 20 million for Energy Transition Fund projects in the North East.

Ryan Crighton, director of policy at the Aberdeen & Grampian Chamber of Commerce, said: “The first £ 20million of the £ 500million earmarked for the Just Transition Fund is welcome, but it only represents 4% of the total.

“It is really important that this coming year be used to quickly identify the projects on which the fund will be deployed, that the rest be distributed at a breakneck pace and that the government ensure that a substantial part of this funding is directed towards to support businesses. , in particular SMEs and workers in the oil and gas sector to retrain and achieve our common zero net ambitions. “

Dr Liz Cameron, Managing Director of the Scottish Chambers of Commerce, agreed: ‘To meet Scotland’s net zero ambitions and secure future jobs in the energy sector and in the North and North East , funding must continue to be stepped up at a sustained pace. in partnership with industry to enable businesses to pivot successfully.

In the wider job market, she added: ‘Scottish businesses continue to face challenges due to supply chain connectivity issues, rising cost prices, inflationary pressures and recruitment.

‘These challenges require urgent government action and while we await further details in the next National Strategy for Economic Transformation, it is important that the Scottish Government acts now, works with business and begins to address these issues as a priority for our economy. ”

The rates and brackets of the land and real estate transaction tax will remain unchanged for both residential and non-domestic properties, and the government will shortly be issuing a call for testimony and opinions on how the supplemental housing supplement works, which remains unchanged at 4%.

Notable omissions concerned any changes to encourage eco-friendly improvements, or an update to the departure tax for flights, which Vishal Chopra, KPMG UK’s tax officer in Scotland, said was considered a ” missed opportunity, ”given the focus on net zero goals.

Andrew McRae, Scottish Policy Chairman of the Federation of Small Businesses, said: ‘The measures outlined today will put some fuel in the tank of the Scottish small business community, but with another round of the business crisis. coronavirus that seems likely, policymakers in Edinburgh and London may need to look at other ways to help businesses on the line.

“We know the crisis has driven many traditional Scottish businesses to digital technology, but today we haven’t heard of any new commitments from the Secretary to the Cabinet to help businesses achieve their ambitions on this front. “

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