Marie’s Column in The Scotsman | Monday 12th January 2026
The build up to government budgets can sometimes be more entertaining than the main event. How often do we read wild speculation about what tricks a Chancellor or Finance Secretary might have up their sleeve, only to be left underwhelmed on the day itself.
Too often, it can feel like a version of 80s and 90s TV staples like Bullseye and Blind Date – “come and see what you would have won”; “have a look at who you could have gone to dinner with”.
If the Scottish Government is to avoid a similar sense of letdown in its forthcoming Budget, it should be truly bold.
That means taking risks but also playing to our many strengths as a nation. In harsh and uncertain economic times such as these, the desire on the part of government to simply batten down the hatches might be understandable, but it is misplaced.
The economy is flatlining and if you speak to just about any of the 380,000 small and medium sized businesses across Scotland, they will tell you that the stakes are now higher than ever. Indeed, many of those SMEs – who together employ around 900,000 people, driving around £93 billion in turnover annually – are now in survival mode.
They are dealing every day with a combination of stealth taxes, cost of living increases and red tape that is curtailing economic growth.
To address that, the Scottish Government should seek to capitalise on the entrepreneurial spirit which exists within the country. It is often claimed that Scotland is by nature less entrepreneurial than other countries, but the statistics suggest otherwise.
With the exact figures vary, the latest data indicates that nearly one in five working-age Scots are entrepreneurs, with over 300,000 involved in early-stage activities and around 210,000 in established businesses, showing increasing activity, particularly among women and younger people.
What these individuals and wealth-creators need is a clear sign that Holyrood understands them and their ambitions, so that they can be helped in their endeavours which will in turn grow the economy and provide more much needed revenue for public services.
The entrepreneurial spirit among younger people is particularly encouraging. Research from the King’s Trust Youth Index shows that more than a third of younger people would like to start their own business.
That entrepreneurial spirit, however, needs to be fostered and encouraged, not dampened. To do so, there is an opportunity to be creative with the Scottish income tax rates that Holyrood has the power to change.
Those powers are limited when compared to the whole raft of personal and corporate taxation still controlled by Westminster, but those partial powers nevertheless offer a way in which we can drive opportunity, retain more of our young people and attract new talent to Scotland.
A scheme offering a zero income tax rate to young entrepreneurs for a time limited period would be one such way of driving that process. It could be restricted to new companies registered in Scotland, and limited to a maximum of 10,000 young entrepreneurs aged up to 30.
They would be requited to invest a minimum of £1,000 in capital and also to employ at least one other person in the first year, during which they would not be liable for tax, thus creating at least 10,000 jobs and seeing a minimum of £10 million invested in the Scottish economy.
Year two would similarly see a zero tax rate applied, but with a requirement of at least £5,000 investment and for at least one more person to be employed, delivering further investment of £50 million and another 10,000 new jobs.
Year three would see a further minimum of 10,000 jobs created, with a five per cent Young Entrepreneurs tax rate applied, before taxation reverted to the standard rates in year four when businesses would be well established.
Such a scheme would not only incentivise growth and job creation, it would also draw a stark contrast between a pioneering and open for business message in Scotland and a UK government approach which seems content to simply manage decline.
The UK Government’s moves to freeze personal tax thresholds will increase the amount of tax that households pay, as more people are hit by so-called fiscal drag and pulled into higher tax bands and some will also start paying tax on their earnings for the first time. The Resolution Foundation has estimated that this would be the second worst UK parliament on record for income growth, ‘beaten’” only by the 2019-24 parliament, which was disrupted by the pandemic.
For any government in Holyrood which is committed to independence, showing what can be achieved with even limited fiscal powers would go a long way to demonstrating what might be achievable with the full set of economic levers.
As we head towards the Holyrood election in May, such bold choices may be too much to hope for in the Budget. A safety-first approach, with a few pre-election sweeteners thrown in to the mix, seems more likely.
However, if we are ever to truly break out of an economic cycle which has been stuck on repeat for far too long and instead kickstart the bottom-up economic growth so many of our communities are crying out for, then this is exactly the kind of approach we should see.
Dr Marie Macklin CBE is a leading Scottish businesswoman and investor.