Councils could take control of business tax

Spanner in the works for rates

(From left) David Lonsdale, Stuart Mackinnon, finance secretary Derek Mackay and Willie Macleod.
(From left) David Lonsdale, Stuart Mackinnon, finance secretary Derek Mackay and Willie Macleod.

RETAILERS could be faced with higher business rates if a new law is passed at Holyrood.

At a committee meeting in the Scottish Parliament, opposition MSPs voted to hand over control of business rates to local authorities. The MSPs on the Local Government Committee passed an amendment to the Non-Domestic Rates Bill that could see councils given control of the poundage rate.

The Non-Domestic Rates Bill was introduced by the Scottish Government following an outcry from businesses at the last rates revaluation in 2017.

Measures included in the bill such as more frequent revaluations – aimed at preventing the shock rate hikes experienced by businesses in 2017 – had been welcomed by retail associations.

However, senior business representatives have warned that this latest amendment has raised “profound concerns.”

David Lonsdale, director of the Scottish Retail Consortium said: “Retailers stump up over a fifth of all rates paid, and with shops under enormous pressure action is needed to reduce rates bills which are now at a 20-year high.

“However, allowing each of Scotland’s 32 councils to set the poundage rate in their area is an alarming and retrograde step, and flies in the face of the Bill’s aims and the thrust of the rates reform agenda.”

After opposition MSPs passed the amendment, Lonsdale along with Stuart Mackinnon of the Federation of Small Businesses and UK Hospitality director for Scotland, Willie Macleod, met with Scottish Government finance secretary Derek Mackay to voice their concerns.

The trio have also published a joint statement condemning the plans. It said: “Taking business rates out of the hands of ministers and handing control over this £2.8 billion tax to councils places a big question mark over existing Scotland-wide rates reliefs, such as the Small Business Bonus scheme. 

“Firms fear this move could lead to higher business rates bills for both large and small organisations.

“It remains unclear too what this change would mean for the finances of rural and less well-off local authorities and therefore ultimately for rates bills in these areas. 

“The lack of any impact assessment to accompany this fundamental change in rates policy and what it will mean for ratepayers, for existing reliefs, and for councils themselves, is troubling.

“MSPs must revisit this amendment to the law at the earliest opportunity.”