Colin Borland: Small steps help improve the business climate

Describing business rates as “complicated” is a bit like describing the mood among the losers at Musselburgh Races as “jumpy”.

Complicated really doesn’t come close to expressing the cat’s cradle of law, convention and practice notes which characterise the system charged with drawing local government income from the Scottish business community.

New Federation of Small Businesses research suggests three out of five small businesses in Scotland don’t understand how their notional property values are calculated.

Independent businesses, which often choose not to use professional property agents, find the system difficult to navigate and understand.

Many who operate within the system seem to enjoy blinding ratepayers with jargon; utilising technical phrases like “rateable value”, “poundage”, “tone date” and “transitional relief” with glee.

By introducing the Small Business Bonus Scheme, the Scottish Government has made a bid to level the playing field and thus removed many of the very smallest businesses from this complex system altogether.

The next step, though, is to make things more comprehensible. Not just for those business owners who must still deal with a system now decades out of date, but our elected representatives who need to be better able to scrutinise the administration of a tax which raises £2.3 billion annually. At the very least, those who operate the system should be regularly held to account by our MSPs.

Further, just as our town centres and high streets are having to adapt, so our rates system must adapt to new business models. We may need to reconsider how we rate out-of-town retail megastores and monster e-commerce warehouses.

Some may even wonder whether every institution classed as a “charity” should get at least 80 per cent rates relief.

At the moment, many business owners are left scratching their heads as to how their bill is calculated. By choosing to develop a 21st-century tax system, the Scottish Government is showing ratepayers the respect they deserve.

• Colin Borland is head of external affairs in Scotland for the Federation of Small Businesses.