58% of Scots businesses ‘don’t want tax change’

About 58% of business owners don’t want the Scottish Government to change income tax rates, while 65% believe an increase would be detrimental to the economy, according to a poll by the Federation of Small Businesses (FSB).

The FSB said the research suggests that, of those that run their own business, 64.8% are basic rate taxpayers and earn between £11,501 and £43,000, 22.5% earn between £43,001 to £150,000 and only 1.6% fall into the additional rate bracket by earning more than £150,000 per year.

The business group has written to Cabinet Secretary Derek Mackay with their results ahead of this week’s Scottish Government budget.

The survey of 315 business owners conducted in November shows that 58.3% want income tax rates to stay the same, 20.7% want tax rates to decrease, while 21% want them to increase.

Asked what would be the consequence of an increase in income tax,  65% said it would be detrimental to the economy, 18% thought it would give the economy a boost and 17% suggested it would have no impact.

Andy Willox, FSB’s Scottish policy convenor, said: “A clear majority of those that run their own business in Scotland don’t want the Finance Secretary to increase income tax rates.

“Those asked warned of the impact on the wider economy, and little wonder with pressure on household incomes and uncertainties about the impact of Brexit.”

The FSB said: “Asked to choose between the four options outlined by the Scottish Government in relation to income tax – where every option would see income tax revenue increase – just under half of all business owners preferred a tax regime with the largest number of bands and rates.

“About a third preferred the option where rates were hiked for high earners and a tenth preferred a hike for mid and high earners.

“Just seven per cent of respondents preferred the option where a small number of additional rates were added.”

Willox added: “This data scotches the myth that business owners are all high earners.

“Further, when forced to choose between Ministers’ palette of tax options, the largest share of business owners chose what could be regarded as the more progressive option.

“They seem to be less worried about their own wallets and more concerned about the wider economy.

“That’s why, overall, smaller businesses don’t want to see tax change.

“As FSB warned ahead of the UK Budget, trading conditions are already turbulent, and additional tax hikes – for them or their customers – are not what we need right now.

“The Scottish Government must resist the siren song of a big change budget, and do what they can to steady Scotland’s economic ship.”