SIR Tom Hunter is calling on the Scottish government to use the tartan tax to help stimulate the economy. But while some want a rise in income tax to plug a hole in the public finances, Hunter is in the camp that favours a cut.
Lifting income tax in times of economic hardship would be politically difficult, possibly suicidal, though raising an estimated £350m from an additional 1p on the basic rate would compensate for the shortfall caused by chancellor Alistair Darling's c
ut in Scotland's budget. It would also help maintain public services.
For similar reasons, cutting income tax would be difficult. However, those who believe the public sector to be a bloated burden on economic growth would prefer to see the tax system used to create jobs and enterprises. First Minister Alex Salmond's instinct to protect the vulnerable is uncontestable, but the public sector is now a risk-free refuge for those who might otherwise contribute to a more dynamic Scotland. A tax cut should be accompanied by some brave revenue-raising measures – selling Scottish Water, for instance.
A tax cut that would reconcile the SNP to its other commitment to building a low-cost economy. Cutting income tax in Scotland is also not an option for the main Westminster parties. For Labour and the Tories to instigate a two-tier tax regime would cause outrage throughout England and Wales and for Labour it would contribute to the image of a Cabinet made up of self-serving Scots. For the Nationalists it is time to put this option on the table.
ITV shake-up puts STV back in pictureTHE umbilical link that preserves the relationship between STV and ITV brought them a little closer last week through the appointment of Michael Jackson as a non-executive director of the Glasgow based television company. No sooner was the former Channel 4 boss installed on the STV board than he was named as a possible successor to Michael Grade at ITV.
But the two companies share a more pressing concern: the advertising downturn which has foxed executives at all media outlets and prompted some soul-searching about the future.
With revenues down 20% at both STV and ITV1 the drive for other sources of income is being accompanied by some severe cost-cutting and forced STV's top management to take a 20% pay cut to show they are sharing the pain.
Grade's decision to terminate his role as executive chairman of ITV a year early was welcomed by investors, though not forced by them. It had become clear to many, however, that a change was likely.
Grade will stay on as non-executive chairman and hand over his CEO role to a successor once some key regulatory issues are settled. Grade's return to ITV two years ago has produced ratings successes – the X Factor and Britain's Got Talent – and the consensus view is that Grade's ITV was better than the one he inherited. But he did not plan for the recession and the reduction in advertising. Both ITV and STV continue to face the challenge posed by multi-channel television.
ITV's balance sheet is under severe strain. Shares have slumped, reducing the value of the company from more than £4bn before Grade arrived to £1.3bn last week. He tried to bounce ITV into a merger with Channel 4 and Five which backfired. Instead, he axed the dividend along with 600 jobs and announced that £245m would be cut from programme budgets. A rights issue to bolster the balance sheet was binned last week.
Grade's successor will need to decide whether to revive the fund-raising plan but a potential bid from a rival such as Virgin Media lurks on the horizon.
STV's challenges are weighty, but considerably less so. It has cleaned up its balance sheet, sold off most of the unwanted businesses and built a new team around the core television company.
This looked like a risky strategy when launched two years ago and it continues to be a gamble. But chief executive Rob Woodward speaks of a revitalised STV further distancing itself from ITV because he believes the relationship between them is outdated.
STV is also weathering the storm better than its southern cousin and the betting now is on STV becoming the last independent channel three company on the mainland.
That would be one in the eye for all those who thought it was only a matter of time before it fell under ITV's control.
