The “adhoc” introduction of new taxes on Scottish firms risks stifling any revival in the country’s ailing economy, business leaders have warned. CBI Scotland is demanding a “moratorium” on new taxes on firms until 2016 as the country continues to dip in and out of recession.
The SNP government has recently introduced a £95 million supermarket tax and cut tax breaks on empty properties to the tune of £36m.
The Scottish economy has shown signs of recovery in recent months but remains in a precarious state. The country emerged from recession in the last quarter of last year and unemployment has fallen for three months in a row. But the latest UK figures show it has since fallen back into downturn and Scotland tends to follow the national pattern, although its figures lag a quarter behind.
CBI Scotland wants stability with an overhaul of the business rates system now looming.
“There needs to be much more predictability and certainty built in to the business rates system in future, with a move away from the often ad hoc introduction of new or additional business rate taxes,” the industry body told ministers.
The public health levy on larger retailers – dubbed the supermarket tax – has been “punitive” and marks a departure from the “hard won uniform business rate” according to CBI.The group warns that high business rates “can be a barrier to commercial investment, growth and cash flow.”
It adds: “An economic downturn is an odd time to be raising taxes on business. The Scottish Government should introduce a moratorium on any new or additional business rate tax rises during the remainder of this Parliament.”
But there are signs that tax hikes could already be looming in other areas for firms. Scottish Water starting to impose water charges on empty properties is believed to be a possibility. This, like the cut in empty property rates relief, is being done in an effort to get vacant buildings brought back into use.
But the submission warns: “No information has been forthcoming so far over the level of charging that is being envisioned let alone the amount of money that ministers hope will be raised.”
The Scottish Government’s flagship legislation aimed at tackling climate change could also see tax cuts for energy efficient buildings.
“We would be concerned if such a discount was funded by a further supplementary levy on other ratepayers,” the submission adds.
The use of “environmental taxation” has been steadily increasing in the UK over the past 20 years, from just four taxes in 1989 to 12 in place today, according to the business group, which added: “While such taxes can have a role to play in stimulating business investment and reducing the environmental impact of business activity, some environment levies are viewed more negatively by business.”
A Scottish Government spokeswomen said: “The CBI’s contribution to our consultation on business rates is welcome and we will consider their views and all other suggestions received in due course.”