Scotland business

Scottish retailers call for review of business rates

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Scottish retailers have called for a "fundamental review" of business rates, ahead of a 2% rise which is due to come into effect on Wednesday.

The Scottish Retail Consortium (SRC) claimed the current rates system was hampering Scottish economic growth.

It said the latest rise was worth an extra £150m in tax revenues, bringing the total business rates take in Scotland to £2.8bn.

But the Scottish government said figures quoted by SRC were incorrect.

The rates increase in Scotland from 1 April has been capped at 2%, in line with England and Wales.

The Scottish government's decision to match the English poundage rates for 2015-16 was announced to the Scottish Parliament in December by the deputy first minister.

But SRC said the 2% increase was coming at a time when inflation has fallen to zero.

It claimed the rise would hit retailers particularly hard, as they contributed about a quarter of the amount paid annually by Scottish firms.

SRC argued that since 2009, business rate revenues "derived from retail" had increased by more than 30%, while there were about 1,800 fewer shops.

The consortium recently outlined its arguments for reform, claiming that the overall rates burden was "too onerous" and that the current system was out of line with other taxes.

It also argued that the "current panoply of reliefs is inefficient and unclear".

'Not fit for purpose'

SRC director David Lonsdale said: "The current system of business rates is not fit for purpose and acts as a drag on Scottish economic growth.

"It acts as a disincentive to invest and as this recent tax hike demonstrates it fails to flex with economic circumstances and only ever rises.

"This has manifestly been to the disadvantage of businesses and town centres right across Scotland."

He added: "The UK government has launched a fundamental review of business rates in England and we would encourage the Scottish government to do the same.

"After all, the Scottish government's recently announced review of the council tax proves that reform of local government finance is not impossible.

"A fundamental reform of business rates is urgently required in order that we can have a system that better supports economic growth and job creation."

'Best deal in UK'

A spokeswoman for the Scottish government said: "The revenue figures quoted today by the SRC are incorrect.

"Scotland's business rates increase was capped again this year, mirroring the English rate, with most of the revenue uplift due to other factors such as new properties.

"We work closely with the SRC and major retailers, and in recent discussions have requested evidence regarding the sector's business rates, which we await.

"Small and medium retailers in Scotland already receive the best deal in the UK, with over 96,000 properties estimated to benefit this year from the Small Business Bonus Scheme, and the prospect of rates relief up to £4,800 in 2015-16."

She added: "Unlike previous administrations, this government has never set a higher rates poundage than in England.

"An estimated 64% of retail premises in Scotland pay zero or reduced rates, and our 2015-16 rates relief package estimated at £618m will help Scotland retain the most competitive business tax environment in the UK.

"The UK government's consultation on the other hand offers little new thinking or prospect of reform.

"The Scottish government will monitor that debate, but more importantly we will build on our 20-point plan to deliver improvement actions following our own review, reflecting feedback from businesses and maintaining a competitive edge for ratepayers."

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