BUSINESS leaders in Edinburgh have urged George Osborne to cut VAT and speed up devolution of air passenger duty in his Budget today.
The Chancellor will deliver the first Conservative-only financial package for nearly 20 years and trails of what he is expected to announce have focused on cuts to tax credits and housing benefits as he slashes £12 billion of welfare spending and his plan to raise the threshold for inheritance tax.
But the Capital’s business community is hoping for measures which it believes could help the city’s economy.
David Birrell, chief executive of Edinburgh Chamber of Commerce, said: “We continue to look for action on a couple of issues from the Chancellor in his latest Budget.
“Devolution of air passenger duty is contained in the Scotland Bill but an acceleration of this process would deliver real early benefits to Scotland’s businesses – particularly here in the Capital.
“In addition, Edinburgh businesses in the tourism sector, like those throughout Scotland, are crying out for a reduction in VAT similar to that enjoyed by their European competitors to maintain our position as an attractive tourist destination.”
In today’s Budget – just three months after the last one – Mr Osborne is expected to make changes to income tax brackets, as part of a manifesto pledge not to raise income tax, national insurance or VAT, as well as to bring fewer people into the top 40p tax rate and increase the tax-free personal allowance.
First Minister Nicola Sturgeon warned the expected cuts to tax credits would hit Scotland’s poorest families hard and could put the economic recovery north of the border under threat.
Tax credits provided £2bn additional cash to households in Scotland in 2013-14, with two-thirds going to help families in low paid work with children
Ms Sturgeon said that tax credits “form an important part of the tax and welfare system, designed particularly to support working families on low incomes”.
And she argued the continuing austerity from the Tories was “economically counter-productive”.
She said: “When people are in work, they spend their wages in the local economy, leading to a virtuous circle. Cutting child tax credits back to 2003 levels will risk threatening Scotland’s economic recovery.
“The deficit needs to be reduced but this should be done in a more gradual manner with more resources allocated to a programme of additional investment in our economy, rather than risking a financial body-blow to hard-working parents and their children.”
Shadow Scottish secretary, and Edinburgh South MP Ian Murray called on the UK government to tackle the root causes of the rising welfare bill – low pay and rising housing costs – and bring down the deficit in a sustainable way.
He said: “The Tories came to office claiming that this government would be on the side of working families.
“Before the Budget has even been published it is becoming clear that, once again, it is working people who will bear the brunt of this government’s cuts.
“With their proposed cuts to tax credits, the Budget risks cutting the feet from under people who do the right thing, go out to work every day and try to do the best by their families.”
He continued: “Nearly 300,000 families in Scotland, including half a million children, will be affected by George Osborne’s cuts to tax credits, at the same time as he refuses to rule out a further tax cut for millionaires.
“Labour introduced tax credits to lift people out of poverty. With no sign that the minimum wage is likely to rise significantly, more families will be struggling to make ends meet.”