Business rate burden ‘has grown out of proportion’

David Lonsdale, director of the Scottish Retail Consortium
David Lonsdale, director of the Scottish Retail Consortium
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SCOTTISH businesses are shouldering a disproportionate burden of taxes, according to the head of a retailers’ ­organisation.

A new consultation paper published by the Northern Ireland Executive has shown that the amount raised in business rates there is almost exactly the same as that raised in council tax – a similar position to Scotland eight years ago.

But David Lonsdale, director of the Scottish Retail Consortium, said there has since been a significant divergence, with business rates accounting for a growing share of local authority funding compared to council tax.

Since 2007 there has been a 42 per cent increase in revenue derived from business rates but only a 7 per cent increase in council tax.

Lonsdale said the figures highlighted how action is required to “fundamentally reform and significantly reduce the burden of Scotland’s business rates system”.

“The Scottish Government needs to get a much firmer grip on the sheer cost of doing business. Retailers and other firms are stumping up ever increasing amounts in business rates, with yet another rise on the cards next spring,” he said.

“At the same time other government-influenced burdens are being introduced or considered, such as the new apprenticeship levy, new wage floor, higher employer pension contributions and a mooted Scotland-wide deposit return scheme.”

Lonsdale said the shop vacancy rate has leapt over the past three quarters and there was a risk of a “further hollowing out of our town centres and retail destinations”.

He said: “A number of retailers have already sought to decrease their store footprint in light of the exorbitant cost of property-related outgoings and changing shopping habits, and further rises in business rates may well accelerate that even further.”

From yesterday, local authorities in Scotland have the power to cut business rates in their area.

David Birrell, chief executive of Edinburgh Chamber of Commerce, said: “Any move to reduce costs for the capital’s businesses would be welcomed. We have long argued that the Scottish Government needs to make business rates work more fairly for firms in the city.”