A group of business leaders has urged the Scottish Government to avoid changes to taxation in next week’s Budget.

In an open letter to Deputy First Minister Shona Robison – who also serves as the country’s Finance Secretary – a group including leaders from Scottish Financial Enterprise, the Scottish Retail Consortium, the Scottish Chamber of Commerce and the Scottish Tourism Alliance said further divergence from the rest of the UK on tax could harm Scotland’s fiscal position.

Investment in Scotland, the letter said, would be harmed, while consumers would see their spending power hit and money will be taken out of the “real economy”.

The letter comes after a report in the Times on Wednesday suggested a new tax band could be introduced.

The letter said: “As representatives of Scotland’s business community, we are united in our commitment to growing the economy and ensuring Scotland remains an attractive place to live, work and invest.

“We therefore urge the Scottish Government to avoid measures in the forthcoming Budget that may make Scotland less competitive, particularly in relation to any decisions on income tax rates and thresholds.

“We are concerned that further divergence with the rest of the UK will reduce the spending power of Scottish consumers, damage business confidence, remove money from the real economy, disincentivise investment in Scotland, and inhibit our ability to create jobs and attract and retain the talent our economy and society needs.

“This is of vital importance if we are to achieve the economic growth necessary to increase our tax base and ultimately fund vital public services.

“Against the backdrop of the cost-of-living crisis, leaving people with more of what they earn allows households to better manage their way through the crisis.

“We recognise this year’s Budget takes place in a challenging context and there are many competing pressures facing ministers, but to collectively deliver on our shared ambition to achieve sustainable and inclusive growth, a pragmatic long-term approach must be adopted.”

The correspondence was also signed by IoD Scotland, the Scottish Licensed Trade Association, UKHospitality Scotland, Salmon Scotland and Aberdeen and Grampian Chamber of Commerce.

Former finance secretary Kate Forbes – who lost the SNP leadership race to Humza Yousaf earlier this year – said she does not believe increasing income tax will necessarily bring in more money.

Speaking to ITV Representing Border on Wednesday, Ms Forbes said: “We only have partial devolution of income tax, not full devolution, so it’s very difficult to protect against behavioural change when it comes to increasing income tax.

“We already have significantly increased rates and bands here in Scotland, and therefore I think we have to be very careful about not ultimately reducing public revenue with what we do with our rates and bands.”

Put to her that such behavioural change could include people moving out of Scotland, Ms Forbes responded: “Or it could be that they don’t come in the first place.”

The Scottish Trade Unions Congress (STUC) this year suggested a new tax band could be created to bring in almost £100 million annually – although that figure has been disputed by the Fraser of Allander Institute.

In the SNP leadership race, Mr Yousaf suggested he would be open to such a move.

A Scottish Government spokesperson said: “The Budget will be set out on Tuesday by the Deputy First Minister.

“She has been very clear Scotland is facing the most challenging budget settlement since devolution because of sustained high inflation and a UK Government autumn statement that failed to deliver the investment needed in Scotland’s public services.

“We are proud that Scotland already has the most progressive income tax system in the UK, protecting those who earn less and asking those who earn more to contribute more.

“This in turn allows us to provide a more comprehensive set of services than in the rest of the UK.”