DEREK Mackay is no stranger to taunts and jibes. Toiling in the shadow of his predecessor, John Swinney, the SNP Finance Secretary is still to be taken seriously by many at Holyrood. But I can’t remember him being cast as the tax dodger’s pal until now. Yet this week’s decision on business rates did just that.

The non-domestic rate system is currently getting a high-profile overhaul thanks to a review by former RBS chair Ken Barclay.

This is unconnected to this year’s revaluation, the first since 2010. But the problems with that exercise have given the Barclay Review far greater prominence than might otherwise have been the case.

Rates raise £2.8bn a year, a fifth of council funding, but they are not usually the stuff of political drama.

Most of the 30 recommendations made in August were readily agreed by the government. More regular revaluations, 100 per cent relief on day nurseries, and more help getting vacant shops into use were all relatively straightforward. A bunch of bureaucratic tweaks were also uncontentious and cheap. But a few of the thornier ideas were kicked down the road to the end of the year pending further consultation.

This week, on the eve of a Tory-led debate in which the opposition parties looked minded to defeat the government, Mr Mackay magically came to a view on the first of these.

For many years, councils have been playing cute by hiving off sport and leisure facilities to charitable trusts known as arm’s-length external organisations (ALEOs). They’re still delivering council goals, but that charitable status means they get a series of tax breaks unavailable to regular council services.

On business rates, the properties involved qualify for a mandatory 80 per cent relief, or up to 100 per cent, at the council’s discretion.

As councils retain the money raised from business rates, you might think it doesn’t matter if ALEOs pay a penny or £1m, it all goes circulates back to the council in a big merry-go-round, right?

Or that if they write off an ALEO’s rates bill, they pay nothing out and get nothing back, so there’s nothing to see. Actually, no.

The Scottish Government pays the relief for ALEOs. So councils can turn round to Edinburgh and say, “See this charitable trust we’ve created? Well, it needs help with its rates, so you have to pay the bill.”

And so the government ends up paying councils £45m a year.

The Barclay Review was very uneasy about this “additional funding” trick. It noted ALEOs were some of the biggest recipients of charity relief in Scotland, with councils ‘self-awarding’ 15 to 20 per cent of all charitable reliefs to bodies they themselves had created.

Some local authorities were even trying to turn school gym halls into ALEOs, just to screw a bit more cash out of central government. This was giving ALEOs - and their associated cafes, shops and venues for hire - an unfair advantage over private gyms and clubs paying rates in full.

“This is tax avoidance and should cease,” the review said. “On the grounds of fairness, we believe there should be a ‘level playing field’ and council ALEOs should no longer be able to abuse the system.”

The £45m saving from closing the loophole was vital to making the review “revenue neutral”, as its remit required. But the councils and trusts squealed to high heaven, and so Mr Mackay backed off and let the ALEOs keep their tax dodge.

Just to confuse matters, he said no future ALEOs would get away with such a dodge. So it’s apparently both acceptable and unacceptable.

He claimed it would help keep down council charges and help the nation stay fit and healthy. Ahem.

Besides, he later told MSPs, it wasn’t really tax avoidance. “There is a world of difference between tax avoidance whereby people take money for profit and squirrel it away and ALEOS, which take the tax that is avoided as a construct of their corporate governance arrangements and reinvest it in public services.” The other Holyrood parties agreed.

Given the squeeze on council services, it would have been a tough political sell to end this £45m boondoggle. But it also makes it harder for Mr Mackay to do anything different with his other outstanding decisions.

The Barclay Review had fairness and consistency among its guiding principles, and it cited these in its argument on ALEOs.

But it also said fairness demanded an end to £5m of charitable rates relief each year for independent schools and £3m for sports clubs, including some of Scotland’s most luxurious golf courses.

Giving Glasgow Academy or Fettes College a tax break is a lot more controversial among MSPs - many in Mr Mackay’s own party - than turning a blind eye to ALEOs.

Yet the Finance Secretary has just shown that fairness is a secondary consideration for him. He cannot now credibly demand an end to charitable relief for private schools on the grounds of equity after letting councils off scot free. If he did, the schools might well consider his cherry-picking grounds for a challenge. He can now look forward to the opposition taunting him as the friend of the fee-paying elites.

Mr Mackay says he wants a more progressive tax system. A little consistency would be a good start.