Tax hikes and funding cuts announced in December could result in more Scottish entrepreneurs leaving the country in search for better opportunities, Ross Stupart has warned.
The tax partner at RSM UK said there was growing concern about a "two-pronged risk" stemming from higher income taxes on the one hand and fewer university places for Scots on the other.
The Scottish government announced in its December Budget it would introduce a 45 per cent income tax band as well as add 1p to the current top rate of 47p from April.
The move will mean there will be six tax bands in the Scottish income tax system compared with three in England and Wales.
The top rate of tax, payable on income over £125,140 in Scotland, will be 3p higher than in England, where it is payable from £150,001 per annum.
Stupart said the tax policy, alongside aspects of the government's spending policy, threatened to create a perfect storm for brain drain in Scotland, with tax seen to be penalising higher earners on the one hand, while spending policy around university funding meant young talent was forced to leave the country on the other.
"There's this potential storm that we are worried about, in a way, that if a tax policy is risking losing our current generation of entrepreneurs to across the border, and our government funding policy of university places is chasing students who are the next generation of entrepreneurs down south, are we at risk of losing our current generation and our future generation of entrepreneurs which could be the future wealth creators, the future jobs in Scotland.
"That is a real worry for us, that two-pronged risk," he said.
Scottish university places are offered for free to Scottish students, but the government has announced funding cuts for universities of £28.5mn in its Budget, equating to an estimated 1,200 funded places to be cut.
Stupart said: "What's happening is a lot of Scottish students are going down across the border and paying for tuition at English universities. And the worry there is, is there are risk that we're losing the next generation of entrepreneurs to across the border."
The solution, according to Stupart, would be to have a form of means testing for university places and at the same time reduce the higher rate income tax bands. Then create higher value jobs so workers pay more tax that way.
A Scottish Government spokesperson said: "Despite the UK Autumn Statement delivering a worst-case scenario for Scotland’s finances, we continue to invest in key services and priorities.
"Tax policies, which are progressive and grounded in evidence, carefully balance the need to raise revenues with the impact on taxpayers and the economy."
According to the Scottish Government the number of PAYE employees in Scotland has been on an upward trend to 2.46mn in January 2024, up 1.1 per cent over the year and its highest level since the series began in 2014.
