Business leaders attack SNP’s business rates hike

Scotland's First Minister and Leader of the Scottish National Party (SNP), Nicola Sturgeon. Picture: Getty

Scotland's First Minister and Leader of the Scottish National Party (SNP), Nicola Sturgeon. Picture: Getty

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FIVE of Scotland’s leading commercial groups have criticised the SNP’s business rates policy claiming it is a burden that struggling firms can ill afford and puts the country at a competitive disadvantage.

One week before the Scottish Election, the five organisations, which together represent tens of thousands of businesses, have decided to join forces to voice their concerns about the plans.

The Scottish Chambers of Commerce, Scottish Engineering, Scottish Tourism Alliance, Scottish Property Federation and the Scottish Retail Consortium are unhappy that businesses in Scotland are paying more than their counterparts elsewhere in the UK.

Business rates generate around £2.8 billion for Scottish local authorities and are based on the “rateable value” of a property. The main poundage rate has increased to 48.4p in the pound.

• READ MORE: Scotland’s tax system could ‘move away’ from rest of UK

Companies with a rateable value of more than £35,000 pay an extra “large business supplement”, which in Scotland doubled from 1.3p in the pound to 2.6p on 1 April. South of the Border the supplement has remained at 1.3p in the pound.

The doubling of the large business supplement is expected to add an extra £60 million each year to Scottish-based firms’ rates bills and affect one in every eight commercial premises north of the Border.

During the SNP manifesto launch, party leader Nicola Sturgeon said her income tax plans, local tax reforms and “changes to business rates for larger businesses” would raise at least £2 bn over the next parliament.

The business groups claimed the First Minister’s comments suggested that the doubling of the large business supplement would remain in place for the entirety of the next parliament.

Liz Cameron, chief executive of Scottish Chambers of Commerce, said: “The decision to double the large business supplement puts many Scottish businesses at a competitive disadvantage to their counterparts in England at a time when the Scottish economy is under performing that of the UK as a whole.

“This additional tax affects a wide range of businesses, including shops, offices, factories and hotels for whom an increase in their fixed costs is the last thing they need at the moment. This is another reason why the forthcoming review of business rates in Scotland must be fundamental and comprehensive.”

Bryan Buchan, chief executive of Scottish Engineering, said: “The imposition of an additional levy on business rates is a burden which an already-struggling manufacturing and engineering sector can ill-afford. Given the avowed intention to support and promote our sector in the recently-published Manufacturing Future, this seems directly at variance with Scottish Government policy.”

• READ MORE: ’Higher tax will drive out talent’ Scots parties are warned

Marc Crothall, chief executive of the Scottish Tourism Alliance, said: “Tourism firms are already grappling with a range of government-imposed cost rises – including the new national living wage and higher employer pension contributions – as well as rises in business rates, and now this supplement on top. “

David Lonsdale, director of the Scottish Retail Consortium said: “The doubling of the rates surcharge only adds to the burden and is at odds with the oft-stated aim of pursuing the most competitive rates regime in the UK.

“We’ve yet to hear a convincing explanation as to why firms operating from medium and larger-sized premises in Scotland are better placed to be stumping up more than firms in comparable premises elsewhere in the UK.”

The Scottish Chambers of Commerce represents around 11,000 businesses. The Scottish Retail Consortium has 255 members and the Scottish Tourism Alliance has 260.

As part of the British Property Federation, The Scottish Property Federation has more than 430 corporate members.

Scottish Engineering has around 380 member companies with 30 to 12,000 staff.

Last night Finance Secretary John Swinney defended the SNP’s policies. Mr Swinney said: “The SNP has delivered for businesses across Scotland. Our small business bonus has already saved firms around £1 billion in total so far, and if re-elected we will extend the scheme to lift 100,000 companies out of business rates altogether. We are also committed to reviewing the wider business rates system.”

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