GEORGE Osborne’s eighth Budget raised as many questions as answers, with uncertainty about how it might shape Scotland’s fiscal landscape going forward, today’s Budget Briefing event with The Herald and Sunday Herald heard.
More than 130 delegates attended the event at 200 St Vincent Street to hear analysis by a panel of experts on the Budget and how it would affect Scotland, including the economy, business taxes and personal taxes.
“What our public affairs clients are keen to understand is how the Chancellor’s meas
ures will affect what John Swinney does in Scotland,” said Peter Smyth, head of public affairs at PR consultancy Indigo. “They want the Scottish Government to have a joined-up plan that measures up with what Westminster is doing – rather than trying to compete with each other. Our clients want to grow and they want politicians to think strategically about how to help them do that.”
Professor Ronald MacDonald, from the Adam Smith Chair of Political Economy at the University of Glasgow’s Adam Smith Business School, said the Chancellor needed to consider new fiscal policies to get the economy going again. “We’ve had such a prolonged period of quantitative easing that it’s difficult to say what happens when that unwinds,” he said. “So there’s huge uncertainty in the UK, but also everywhere else that is now reliant on QE. If there’s another downward revision in GDP, what’s the Chancellor going to do? QE hasn’t worked, so the Chancellor should be thinking about a different strategy at this point.”
On personal tax changes, Grant Johnston, a partner at law firm Wright Johnston Mackenzie, said: “The increase in the higher rate of tax to £45,000 is very welcome and slightly more than anticipated. It’s almost throwing down the gauntlet to the Scottish Government to see if they can match it going forward. Because if they can’t match it, it will be interesting to see whether people decide to relocate.”
Ken Welsh, managing director of wealth management consultancy VWM Wealth, said: “The cost of living in the UK is so high, that to expect someone in their mid-20s or 30s to be putting away £4,000 a year in the new Lifetime ISA is a huge ask. And if they use the money they put in for anything other than a house purchase, they lose all the government’s bonus (£1 back for every £4 put in) – and there’s also a 5 per cent charge. So I don’t see there being huge a take-up of this.”
On the government’s increasing focus on tax avoidance and evasion, including a raft of measures announced yesterday that would raise an extra £12 billion in taxes, Derek Hanlan, director of taxation at management consultancy Craig Corporate, said: “It should be the right of any individual or business owner to arrange their tax affairs accordingly, but the opportunity to do that is diminishing. If you know what the tax measures are, at least you can plan accordingly. But if they move the goal posts half way through the game, it becomes much more difficult.”
Fraser Campbell, a partner at accountancy firm Campbell Dallas, said: “We tend to have more discussions not about how can you minimise taxation, but how can I be seen to be discharging my obligations and being compliant? So the nature of the conversation around tax has changed significantly from a legalistic to a moralistic discussion. Companies are saying – we want to pay our fair share of tax and we want to be seen to be paying our fair share of tax.”
Kim Wilson, managing director of 200 SVS said: “It was great to see so many of the business community coming together at 200 SVS to discuss the Budget with such a dynamic panel of speakers.”
The event was hosted by Ian Macwhirter, the political commentator for The Herald and Sunday Herald.
Written by Victoria Masterson