Following much anticipation and speculation, the details of the 2018/19 draft budget have finally been revealed. For many, because of the changes to income tax, this will feel like the first Scottish Budget which will have a personal impact, although in reality, all of the Budgets have an impact on every one of us.
Superfast broadband has been a key issue for the Chamber and we have been driving the need for better access to this for some time. On the face of it the promises appear good news but action is more important so we will keep our powder dry for now.
Income tax was a hot topic in the run up to the Budget address and, as anticipated, changes were announced to the system. We are concerned that the increase in tax for higher earners will impact on Scotland’s competitiveness as we diverge from the rest of the UK. Time will tell what impact this move will have on the North-east although it was hardly a surprise having been well trailed before the event.
While first-time buyers may benefit from relief of Land and Buildings Transaction Tax (LBTT) for properties under £175,000, we are concerned that the Scottish Government have not gone far enough with no changes to bandings. We have heard from property experts in the North-east that the LBTT bandings have a detrimental effect in this region and we raised this issue with Derek Mackay at our roundtable discussion in November.
The issue of business rates has also been a contentious one for the region and has been at the forefront of the Chamber policy team’s activities. We were encouraged that most of the recommendations in the Barclay Review will be implemented, arm’s length council bodies will be pleased and independent schools may be disappointed, with more detail to come on this.
We welcome the Scottish Government’s decision to cap the inflation uplift to business rates with CPI as opposed to RPI; and while we were pleased that the Scottish Government’s transitional relief for offices and hospitality in Aberdeen City and Aberdeenshire will continue next year we have concerns with the caveat that the transitional relief will be for “all but the very largest hospitality properties”.
Our initial review of the Budget indicates a mixed picture for the business community. However, time will tell what effect the announcements will have on Scotland’s economy and competiveness in the future.