Businesses have put on hold plans to move to Scotland over fears about the effects of a proposed local income tax, an industry leader said today.
Iain McMillan, director of the Confederation of British Industry (CBI) Scotland, said several firms had warned ministers about their concerns over the new charge.
As a result, these enterprises had frozen plans to shift operations and jobs north of the border until the local income tax issue was resolved.
He said: "We know of a number of businesses now that have warned the Scottish Government that operations and jobs that they would have brought to Scotland they have put on hold until this matter is determined."
Mr McMillan would not name the companies or say how many were involved saying only there were "several that we know of".
A spokesman for finance secretary John Swinney said: "We are not aware of any businesses in this position".
He also defended the local income tax saying it was a "fairer system".
The SNP government wants to replace the council tax with a local income tax set at three pence in the pound.
The tax proposals have already been the subject of widespread criticism in the business community.
Mr McMillan renewed these calls, saying it was time the government "threw in the towel" and ditched the plan.
"It could be very damaging and it really is time the Scottish Government threw in the towel on this and stop telling business that they think that a local income tax will be good for business," he said.
"My answer to that is: 'Business knows what is best for business, not Alex Salmond and his government'."
The Nationalist government has the support of the Lib Dems at Holyrood for a local income tax, but the SNP wants it set centrally at three pence in the pound, while the Lib Dems say councils should be able to vary the rate.
Labour and the Tories oppose the proposals.
A spokesman for John Swinney said: "We are not aware of any businesses in this position - what we are proposing is a substantial cut in local taxation in Scotland, which would be lower than in the rest of the UK.
"We have regular very positive discussions with the business organisations in Scotland - including on the delivery of our six-point recovery plan to accelerate infrastructure investment, cut or abolish business rates for the smallest firms, and help families through measures such as the council tax freeze.
"We listen carefully to all views, and of course Parliament would need to agree to proposals to scrap the unfair council tax in favour of a local income tax based on ability to pay.
"We advocate our fairer system coming into effect in 2011/12, and believe that our LIT proposal contains key advantages for Scottish business."
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