Retail body urges Government to resist raising taxes ahead of budget

Ministers ought to resist raising taxes to help retailers struggling with changes in shopping habits, weaker demand and rising costs, according to a leading industry group.

The Scottish Retail Consortium (SRC) has warned in a submission to Finance Secretary Shona Robison these are “unsettling” times for businesses and called for spending restraint rather than tax rises in the upcoming Scottish budget.

The body also recommended the Scottish Government should inject greater certainty into its fiscal plans through a two-year budget accord with opposition MSPs leading up to the next Holyrood election.

Its paper contains a total of 23 recommendations including ruling out an increase in income tax rates to bolster consumer spending and restoring a level playing field with England for firms paying higher property rates.

It is estimated the retail sector supports around a quarter of a million jobs in Scotland but the SRC said figures published last week showed the number of roles had slumped by 30,000.

David Lonsdale, director of the SRC, said: “We recognise this will be a challenging budget for Scottish ministers as they seek to balance a stark fiscal outlook whilst trying to stimulate greater levels of economic growth.

“These are unsettling times too for retailers, despite the industry having shown tremendous fortitude and resilience to come through the tribulations of the past few years of Covid and the costs crunch.

“Trading conditions remain tough and the only fixed point in a world of flux for the industry seems to be rising costs, which are near impossible to absorb, which means they are likely to be passed on to shoppers.

“To provide greater certainty, a two-year budget accord with opposition MSPs could provide a more strategic and less piecemeal approach to devolved policy making.

“Stimulating greater levels of private sector investment is crucial to lifting Scotland’s measly rate of economic growth and living standards, and generating the tax revenues to support public services and alleviate poverty.

“Increasing taxes could exacerbate the problem by further hampering growth.

“That’s why we are calling for a mixture of spending retrenchment, forestalling rises in taxation, competitive business taxes and regulatory easements, as a means of proving a path to greater prosperity and towards making Scotland the best place in the UK to grow a retail business.”

Scottish Conservative finance spokeswoman Liz Smith said: “The message from Scotland’s struggling retail sector could not be clearer: the high tax, low growth environment the SNP Government has fostered is crippling businesses, and must be reversed.

“Scottish retailers crave a level playing field with the rest of the UK, yet SNP ministers have failed to pass on the rates relief available to rivals south of the border, while higher personal tax rates in Scotland are reducing consumer spending power and slowing down the economy.

“SNP mismanagement has created a massive black hole in Scotland’s public finances, and the SRC is right to warn that attempting to plug it with further tax rises would be devastating and counterproductive.

“It’s high time Shona Robison finally listened to Scottish business and opposition politicians to avoid a repeat of last year’s disastrous SNP tax-and-axe budget.”

A Scottish Government spokesperson said: “The Scottish Government recognises the retail sector is an important part of Scotland’s economy and, as part of its retail strategy, engages regularly with sector representatives.

“In 2024-25, we are freezing the basic property rate and providing a package of reliefs worth an estimated £685 million, including the Small Business Bonus Scheme which continues to be the most generous relief of its kind in the UK.

“Decisions on tax policy, including income tax and non-domestic rates, will be set out in the 2025-26 Scottish Budget later this year.”