SRC seeks tax relief for struggling consumers

Woman shopping

Speaking to 105 industry leaders and parliamentarians at the SRC’s Annual Reception in Edinburgh yesterday (14 June) evening, SRC’s Chairman Andrew Murphy called on the Scottish Government to do more to assist the retail industry and consumers.

Murphy called on the Scottish Government to consider bringing forward proposals from the SNP’s 2016 Holyrood Manifesto to create a new zero-rate income tax band. Accelerating its existing plans for a new zero-rate income tax band would allow the Scottish Government to effectively raise the tax free personal allowance in Scotland over and above that applicable in the rest of the UK.

With the Office for Budget Responsibility forecasting household disposable incomes will barely rise this year due to flat wages and rising inflation (now 2.9%, the highest in four years), at a time when Scottish households are grappling with council tax rises and with higher statutory pension increases in the pipeline, the SRC believes the Scottish Government need to be ready to take action soon to help struggling high streets and protect retail jobs. In the last two years retail employment has fallen by 5,000 and 1,600 shops have closed in the last seven years.

Murphy also called for the Scottish Government to develop a Scottish retail industry strategy, and reiterated the SRC’s calls for business rates to be reformed; specifically to bring in three-year revaluations and competitive rate levels.

Andrew Murphy said: “Retailers – and the 250,000 Scots who directly work in the industry – need confident consumers who will continue to spend in our stores. That’s why the SRC argued ordinary consumers shouldn’t face an increase in income tax rates in Scotland; and we were cheered the Scottish Budget reflected that view in February when it was passed.

“However, that move may not be enough given the gathering economic clouds. Both the ONS, and our own figures, show consumer spending under pressure from higher overall inflation, higher food prices and other costs. Retailers have kept shop prices down in the face of significant input inflation – but that can’t continue forever.

“If this squeeze on household disposable incomes is set to persist, then Scottish Ministers should be prepared to consider bringing forward their existing plans to create a new zero-rate income tax band. That would effectively increase the tax free personal allowance over and above existing plans – giving the opportunity to increase the allowance more quickly than in the rest of the UK, which we believe could provide a timely boost to consumers, the economy, and hopefully retail sales and employment. “