eFinancialCareers

Plans for a local income tax in Scotland could discourage quality candidates from making the move north of the border.

Owen Kelly, chief executive of Scottish Financial Enterprise – which is backed by such financial powerhouses as Royal Bank of Scotland and Standard Life – has told the Scotsman that Government plans for local income tax are troubling his members.

He said: “Anything that starts to look like we have people ... working in Scotland paying either more or a different kind of tax to the UK is a differentiation that’s an added complication – let me put it as mildly as that – to the business of promoting, selling and attracting people to come and live and work here.”

The local income tax proposal is part of a larger ‘national conversion’ plan from the SNP Government, aimed at making the case for independence.

A spokesperson for the SNP Government told us that Kelly’s comments weren’t helpful before any plans had been finalised.

John Swinney, cabinet secretary for finance and sustainable growth, denies that Scotland’s on the way to becoming a high tax enclave – if anything, he says, the country is looking to become more tax-competitive.

“The Scottish Government has just secured Parliamentary support for a budget that will freeze the council tax and reduce business costs in Scotland,” he tells eFinancialCareers.

“These two measures highlight the Government’s determination to make Scotland a more competitive location for people and business, and that will run through all of the Government priorities, including the local income tax,” he says.

Tavish Scott, Liberal Democrat shadow cabinet secretary for finance, adds: “People expect taxation rates to reflect their income and their ability to pay. This is what local income tax would do. In the US, there are different taxation rates in different states across the country and this doesn’t stop business and entrepreneurial activity.”