THE soaring use of business reliefs and exemptions proves the controversial business rates system is “inefficient and no longer fit for purpose”, shopkeepers have warned.
The Scottish Retail Consortium (SRC) has called on Holyrood ministers to revamp the system used to levy firms for the decade ahead, saying it was “creaking, unwieldy and expensive”.
Figures released in response to a parliamentary question by the Conservative MSP Dean Lockhart show that the value of business rates relief in Scotland has leapt by 77 per cent in the past nine years, rising from £324 million in 2007-08 to £573m this year.
At the same time, the value of the package of reliefs as a proportion of the overall tax take from business rates over the period has risen too, up from 17 per cent to 21 per cent, according to SRC research.
SRC Director David Lonsdale said: , Director of the SRC, said that urgent action was needed to put the complex system onto a sustainable footing. He said: “The current system of business rates is creaking, unwieldy and expensive and only seems to function through myriad exemptions and reliefs that continue to grow as an overall proportion of the total amount paid in business rates.
“The increasing use of these sticking plasters highlights how the current system is becoming more inefficient and is no longer fit for purpose.
“There is an urgent need to recast business rates for the decade ahead, in order to deliver a reformed system which is modern, sustainable and competitive.”
Last year, the Scottish Government launched a review of the business rates system headed by former RBS chair Ken Barclay, which is due to report back in July.
Mr Lonsdale added: “We hope the current Barclay Review will lead to a reformed rates system and substantially lower tax burden as it would increase retailers’ confidence about investing in new and refurbished shop premises, create jobs and help revive high streets and town centres.”
Earlier this year The Herald led a ‘Great Rates Revolt’ campaign highlighting opposition to the Scottish Government’s last revaluation, which vastly increased bills for many firms.
The hospitality and licensed trade was worst affected, with some owners facing huge increases of up to 400 per cent. Among them was Stewart Spence, whose five-star Marcliffe Hotel in Aberdeen was a favourite of Alex Salmond.
Mr Spence said he would not pay the proposed 25 per cent increase in his rates as it took no account of a 40 per cent drop in his turnover following the oil price slump Finance secretary Derek MacKay eventually bowed to pressure and announced a £45m package of support benefitting 8,500 premises across Scotland, which capped increases at 12.5 per cent next year for hotels, pubs, clubs, restaurants and cafes, .
A Scottish Government spokesman said: “We have cut the rates poundage, expanded the Small Business Bonus Scheme – which has already saved businesses around £1.3 billion – limited the application of the large business supplement, and targeted further relief where it is most needed. “Overall, we are funding around £660 million of rates relief this year, with local councils able to further reduce rates following the Community Empowerment Act.
“The external review of non-domestic rates is due to conclude this summer, and we have committed to responding swiftly.”
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