Scotland politics

Calls for 'fundamental' Scots business rates review

Monopoly hotel piece on cash Image copyright PA
Image caption The hotel sector was set to be disproportionately affected by the rates revaluation

The Scottish government has been urged to undertake a "fundamental review" of the business rates system.

Finance Secretary Derek Mackay has announced a 12.5% cap on increases to rates for hotels, pubs and restaurants as part of an ongoing revaluation.

Representatives of tourism and hospitality groups met Mr Mackay to urge a more permanent solution.

And Green MSP Andy Wightman echoed the call while attempting to block a rates order at a Holyrood committee.

Mr Mackay told Holyrood's local government committee that he was "open-minded to look at how we can improve" the rates system.

A Scottish government review of the rates system led by former RBS Scotland chairman Ken Barclay is due to report in the summer.

Image caption Derek Mackay told MSPs he was open-minded about improving the system

Mr Wightman put forward a motion to annul the piece of secondary legislation which approves the poundage rate for business rates in Scotland, arguing that this was "the only means of scrutinising the decision of ministers".

He said: "I want parliament to be given the opportunity for much more fundamental examination of the non-domestic rating regime.

"There are much, much more fundamental questions of tax design to consider that go well beyond the Barclay review terms of reference and, indeed, bring into question the very existence of the non-domestic rating regime."

'Reckless' move

Mr Mackay said the move to annul put at risk about £2.6bn for local government services ahead of the final vote on the budget on Thursday.

He said such a move would be "reckless", describing it as an "11th hour bid" to review a poundage rate which matches that in the rest of the UK and which has won political consensus.

He said: "I have not and do not object to the scrutiny. I could have answered questions on this when I've appeared at this committee or the finance committee or any other place in relation to the budget.

"This is the same process that has been used for years. I'm open-minded to look at how we can improve it."

After Conservative MSPs indicated they were not minded to support the motion to annul, leaving it with no chance of passing, Mr Wightman decided to withdraw it.

Image caption Andy Wightman said attempting to block rates-setting seemed to be the only way to scrutinise it

On Tuesday, Mr Mackay announced rates relief for hospitality businesses which have been disproportionately affected by the ongoing business rates revaluation.

This has been welcomed by tourism groups, but a series of groups have since met with the finance secretary calling for a more permanent solution.

The Scottish Tourism Alliance, the British Hospitality Association and the Scottish Licensed Trade Association met Mr Mackay and Business Secretary Keith Brown on Thursday to seek "further clarity" about the relief scheme.

A statement for the group welcomed the "pragmatic" capping system, but said "concern remains around the need for a more permanent solution and for a fundamental review of the way that hospitality businesses are rated and assessed.

They added: "Today's meeting marked an important step forward in establishing what will be a more continuous dialogue between trade associations and Scottish government during the next 12 months on the business rates issue and to inform, influence and shape more enabling and competitive policies for Scotland's tourism industry."

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