Taxation

First Minister’s Question Time – in the Scottish Parliament at on 7 November 2024.

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Photo of Russell Findlay Russell Findlay Conservative

One of Scotland’s most successful businessmen, Sir Tom Hunter, responded to Labour’s tax rises last week by saying:

“There is no economy in the world that has ever taxed its way to economic growth”.

Does John Swinney know of any examples?

Photo of John Swinney John Swinney Scottish National Party

What I know is that we have to be prepared to invest in economic growth. I have set out my firm view that investing in economic growth means investing in the infrastructure and the capacity of our country and investing in the public services on which a great deal of economic foundations are founded. I also understand the importance of creating, encouraging and stimulating private economic activity in our economy, which is why one of the four priorities of my Government is supporting and nurturing economic growth.

Photo of Russell Findlay Russell Findlay Conservative

John Swinney surely knows that high tax kills growth and costs jobs but, in his topsy-turvy world, hitting hard-working Scots with high taxes will somehow boost our struggling economy. Even his own MSPs are worried. Today, the Scottish National Party-led Finance and Public Administration Committee has said in a report that it is

“deeply concerned about the Scottish Government’s ... approach”.

In the report, Professor David Heald of the University of Glasgow called elements of Scotland’s income tax rates “ludicrous”. The report quoted the Aberdeen and Grampian Chamber of Commerce as saying:

“the tax burden on businesses is extremely high; this penalises success”

and

“reduces profitability”.

Does John Swinney accept that its concerns are valid?

Photo of John Swinney John Swinney Scottish National Party

Anyone who looks at my track record knows that I engage closely with the business community on all these questions. I also understand that there is a vibrant debate about the economic choices that are to be made. From Russell Findlay’s questioning, I suspect that he is on one side of that argument and that I am on the other, because I believe in using investment to stimulate growth. We have had an example over the past 14 years of what the constraining of investment does—it reduces life chances, opportunity and growth. That has been an unmitigated disaster for the country, and that is the record of the Conservative Party.

Photo of Russell Findlay Russell Findlay Conservative

John Swinney talks about investment stimulating growth, but the point is that there has been no return on that so-called investment by the Government. The independent Fraser of Allander Institute found that only 9 per cent of firms in Scotland say that the SNP Government understands the business environment.

Over the past three years, SNP ministers have received more than £600 million from the United Kingdom Government to provide rates relief for the retail, hospitality and leisure sector, but struggling Scottish businesses have barely received one tenth of that figure. Michael Bergson of the Buck’s Bar group has told us that the SNP’s failure to pass on rates relief was a “disgrace”. Stephen Montgomery of the Scottish Hospitality Group has said that,

“at the very minimum, tax relief should be passed on in full and with no cap”.

Scottish businesses urgently need more help, so will John Swinney do the right thing?

Photo of John Swinney John Swinney Scottish National Party

I will make a couple of points at the outset in responding to Mr Findlay’s latest question. First, he says that there is no evidence of growth. Scotland’s gross domestic product per capita has grown faster than the United Kingdom’s since 2007—if we account for population growth since 2007, GDP per person has grown by 10.5 per cent in Scotland, compared with 6.3 per cent at the UK level. I remind Parliament, so that it has the complete information, that 2007 was the moment when the Scottish Government was elected. Therefore, in this Government’s lifespan, we have delivered more growth per head than in the rest of the United Kingdom.

Photo of John Swinney John Swinney Scottish National Party

The second point—we are on helpful clarifications here, Presiding Officer, if you will forgive me—is that most of the taxation that is imposed on business is not determined by this Parliament; most of it is determined by the United Kingdom Parliament. With regard to business rates, we have the most comprehensive business relief scheme for small businesses. That means, in our estimations, that about 50 per cent of the hospitality sector pays absolutely no business rates whatsoever in Scotland. That is where we take our action to support the sector in Scotland.

Photo of Russell Findlay Russell Findlay Conservative

I apologise for standing up too soon. I thought that John Swinney had finished, but he was still going.

When faced with the reality of what businesses are saying, John Swinney reaches for his big book of selective statistics. However, everyone—business owners, hospitality groups, chambers of commerce, academics, the Scottish Parliament’s Finance and Public Administration Committee and even SNP back benchers—is pleading for the SNP to change direction.

Scotland’s tax system needs to change. Higher taxes are stopping businesses growing and preventing them from creating jobs, which would generate more money for public services. Scotland’s businesses need more than rates relief—they need a game-changing tax cut. In this year’s budget, will John Swinney start to repair some of the damage that has been inflicted by the SNP?

Photo of John Swinney John Swinney Scottish National Party

I have already put on the record the fact that the Government has delivered more growth per head in Scotland than the United Kingdom has done.

On the tax changes that the Government has presided over, people such as Mr Findlay told us that there would be an exodus of people from Scotland because of the tax situation. However, we have seen a net in-migration to Scotland over the period of those tax changes being in place.

Of course, there is a budget to be gone through, and the budget cannot pass in Parliament without the agreement of members beyond those of the Government party, because we do not command a majority in Parliament. Led by the Cabinet Secretary for Finance and Local Government, discussions are under way to construct agreement in Parliament about what the budget will look like.

The implications of Mr Findlay’s point on cutting taxes are that we will have to cut public expenditure, too. If people are going to come forward with substantive propositions in the dialogue with the finance secretary, they should at least have the democratic responsibility to set out not only where the tax cuts will come but where the spending cuts will come. If we dabble with the financial madness of the Conservative Party that we got under Liz Truss, we all know where that will end up.