ICAS submits views to Advisory Group on Economic Recovery in Scotland
ICAS has submitted views to the Advisory Group on Economic Recovery. The Group has a remit to advise the Scottish Government on actions that will make a difference to businesses across sectors and to regions throughout Scotland to aid Scotland’s economic recovery from COVID-19.
The submission focuses on key areas of expertise for ICAS: funding, accountability and scrutiny, sustainability and taxation. It contributes views in relation to topics including:
- Exiting lockdown
- The implications for the required level of taxation in the economy, VAT& potential new forms of taxation
- Accountability & building trust in government
- Business support, finance & incentivising private investment
- Conditions of government support
- Taxation of workers, and
- Sustainability.
More broadly, the submission includes the following points.
Moving to a post-COVID-19 environment
Many businesses will require to invest to adapt to new conditions, whether it is social distancing, improving efficiency, escalating use of technology, innovating delivery models or adapting their websites and business model.
Phasing in these costs to meet uncertain demand is a judgement and will use up cash reserves; decisions will also need to be made about investing in growth.
Transitioning away from support mechanisms e.g. CJRS helps business adapt to the changes.
Encourage confidence and trust
Government can help to give confidence not only to businesses considering investment but also to consumers to encourage spending.
Businesses must play a part to demonstrate they are operating safely to encourage customers.
Recent Bank of England findings indicate an increased level of forced savers across the population.
The risk is that fear keeps people at home even when the lockdown is lifted creating a mismatch between supply and demand.
Accountability is key
A policy of openness and transparency, alongside ensuring effective challenge and scrutiny exists, is critical in building trust in government, meeting stewardship duties and demonstrating accountability for decisions.
Where cross-jurisdictional policy differences arise, the rational needs to be clearly explained and fully accounted for to support accountability and build trust.
This requires maintaining a transparent and open approach to policy decision-making to promote a wider understanding of the differences in the economy and society and the impact of the policy choice.
This should also include the public finances, fiscal framework and level of influence/ control across devolved areas as the inherent complexity inhibits public accountability.
The purpose of the Scotland Act 2016 was to make the Scottish Parliament more accountable to the public, but this purpose is undermined if it is not understood.
More could be done to improve wider understandability and explain decisions.
The role of taxation
There are broader points raised in the submission, including the desirability to have public discussion, in both Scotland and the UK, exploring the role of tax in supporting public services and contributing to the common good.
For example, ICAS was asked to give evidence to the Citizen’s Assembly, which was a rich and positive session and further work could be done through such a mechanism on the questions posed by the Advisory Group.
In terms of tax policy making, ICAS said that it would like to see the Parliament continuing to evolve from being mainly a spending institution to one in which equal weight and deliberation is given to raising the taxes to fund the spending.
To support this the Scottish Parliament should institute a Tax Committee.
This would ensure that time would be set aside for scrutiny of tax policy, and its members would be able to develop their tax expertise.
Working together
The UK and Scottish Governments, HMRC, HM Treasury, and everyone involved in developing and implementing the measures introduced to try to ease the economic impact of coronavirus, have instigated closer and stronger collaboration with the professional bodies and the accountancy profession.
ICAS hopes this will continue as we work our way out of this crisis because it has been beneficial for both our members and the authorities.
An illustration of the benefits of this close collaboration has been the design and implementation of the CJRS and SEISS schemes.
The full submission is now available – and members are invited to contribute their views, comments and feedback – members@icas.com or on CA Connect.