Ross Stupart

With Scottish Parliament elections fast approaching, political parties are setting out sharply different views on how to grow the economy and fund public services. While the Scottish Parliament’s devolved tax powers remain limited, its spending responsibilities are much broader.

The political party manifestos signpost each party’s priorities on tax, spending, welfare and economic growth aspirations. The proposals across the parties are quite different, and would set very different platforms for businesses, investors and employers.

Income tax

The most significant divergence between parties is how progressive the income tax regime should be, with very different views on outcomes of income tax levers. The SNP says it will not increase income tax rates or the number of bands, but will leave scope to use threshold freezes.

Scottish Conservatives and Reform UK are proposing explicit cuts to Scottish income tax, with plans to simplify the band structure and reduce rates below those in the rest of the UK. Their argument is that Scotland’s relative tax position is now a drag on growth, investment and talent retention.

Scottish Labour and Liberal Democrats rule out income‑tax rises, but stop short of committing to near‑term cuts, framing tax reduction as something that should follow, rather than lead, economic growth.

The Scottish Greens explicitly support higher taxes on wealth and high‑value assets, not income, to fund an expansion of universal services. For employers and senior employees, this means continued uncertainty around Scotland’s attractiveness for skilled labour and wealth generators.

Property taxation

Land and Building Transaction Tax (LBTT) and council tax are likely targets for more significant change. Property‑related taxes could be a material area for reform.

Labour proposes a targeted cut to LBTT for first‑time buyers, but no broader reform, while Conservatives and Reform UK go much further, with proposals to abolish or phase out LBTT on main residences entirely – a significant change for housing market liquidity.

The SNP and Greens both support higher charges on high‑value homes, effectively a form of ‘mansion tax’ delivered through additional council tax bands (already introduced in the January 2026 budget, effective from April 2028.)

The Greens go furthest, proposing to scrap Council Tax altogether and replace it with a residential property tax based on up‑to‑date property values.

For developers, landlords and investors, the differing views in this area could be seen as a reform risk which prolongs uncertainty and soften demand in the property sector pending clarity on who forms the next government.

Business rates

There’s near‑universal agreement that Scotland’s non‑domestic rates system is broken, but differing views on the path to resolving the issues.

While Labour proposes replacing business rates with a new, revenue‑neutral local business levy, the Conservatives support structural reform, including a tax‑free allowance to remove smaller properties from the system, and smooth cliff edges.

The SNP doesn’t say much about business rates, other than it will ensure there is a rebalance of the system. The Liberal Democrats focus on targeted reliefs (e.g. protecting key local services, such as the ‘last bank in town’) while Reform UK advocates broader reform or replacement as part of a pro‑growth agenda.

While reform looks likely whichever party leads the next parliament, how any reform will impact particular geographies, locations and industries remain highly uncertain.

Economic strategy

There are two competing models for economic growth: growth first vs redistribution first. The choice presented to voters – and investors – is a tax‑and‑competitiveness‑led model (Conservatives, Reform UK), centred on lowering marginal tax rates, simplifying the system and relying on investment‑led growth to expand the tax base.

Alternatively, a state‑led investment and redistribution model (SNP, Green Party) using higher taxation targeting specific populations within the tax base to fund universal services, direct cost‑of‑living interventions and green industrial policy.

The middle ground (Labour, Liberal Democrats) emphasises productivity, planning reform, skills and infrastructure first, with tax cuts only coming once a pathway to growth is secured.

Planning, infrastructure and housing as economic levers

Across parties there is strong consensus that Scotland’s planning system and infrastructure delivery are constraining growth.

Labour and the Liberal Democrats place planning reform at the heart of their growth strategies, linking housing supply directly to labour mobility and productivity.

The SNP and Greens emphasise public investment, particularly in affordable housing and public transport, as both an economic and social lever, while the Conservatives and Reform focus more on unlocking private capital through reduced regulation and faster approvals.

For investors in real estate, energy and infrastructure‑linked sectors, planning reform could matter more than headline tax rates.

Energy policy and the investment signal

Energy remains central to all parties’ economic narratives, but with starkly different implications.

The Greens prioritise renewable investment and climate‑aligned industrial strategy. They remain strongly opposed to any exploitation of the North Sea basin.

The SNP and Labour position energy policy as a source of long‑term national wealth and jobs, though with different views on market involvement. The Conservatives and Reform UK place greater weight on energy affordability and security, including continued oil and gas production and openness to investment in nuclear.

The divergence in energy policy will likely make it a heavily debated topic in the next parliament, and will likely influence capital allocation decisions in energy‑intensive industries.

Bottom line for business and investors

Tax risk has shifted from rates to tax system structure: property taxes, business rates and threshold policy now matter at least as much as headline income‑tax rates.

Policy volatility is most likely in property taxation and local taxes – areas squarely within devolved control, and therefore businesses in the real estate, hospitality and leisure sectors in particular will be watching keenly on which party, or combination of parties, gains control of Holyrood.

Economic growth is the stated priority of every party, but would be attempted through very different mechanisms – tax competition, planning reform, public investment or redistribution of wealth. Public finances are already highly stressed, and the next parliament will have some very difficult decisions to make on spending priorities.

Manifestos that commit to tax cuts or material additional spending programmes, without clear costing plans will lack credibility, and will carry major execution risk.

Ross Stupart is Scotland regional managing partner for RSM UK