Business leaders unite in call to reverse rates rise

Scottish business leaders have joined forces to call for a reversal of a doubling of a tax that is expected to cost firms more than £60 million this year.

Business leaders have urged Derek Mackay to reverse the doubling in the business rates supplement. Picture: Steven Scott Taylor
Business leaders have urged Derek Mackay to reverse the doubling in the business rates supplement. Picture: Steven Scott Taylor

In April, the Scottish Government increased the business rates supplement for large businesses from 1.3p to 2.6p in the pound in a move described by ministers as a “modest increase” aimed at helping relieve the burden for smaller firms.

Thirteen of Scotland’s leading business organisations have now written a joint letter to Derek Mackay, cabinet secretary for finance and the constitution, urging a reversal of the decision.

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The lobby groups, including CBI Scotland, the Institute of Directors Scotland, the Scottish Council for Development and Industry, Scottish Engineering, Scottish Chambers of Commerce, the Scotch Whisky Association and the Scottish Retail Consortium, argue that the move would help support businesses at a time of uncertainty given the recent Brexit vote.

They also said it would “level the playing field” with England where the supplement remains at 1.3p in the pound.

The supplement, which affects one in every eight commercial premises in Scotland, is expected to add £62m to the rates bill of large firms this year.

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“Reducing the surcharge to the level which applies in England would not only be fair and make Scotland’s business rates more competitive, but would also help to reduce the cost base of many hard-pressed businesses at this time of economic uncertainty,” said the letter.

“We appreciate that the 2017 rates revaluation is looming and that the work of the Barclay Review of Business Rates is just beginning to get under way, but a reduction in the large business supplement back to 1.3p would go a long way to levelling the business rates playing field across the UK.” The total tax revenue from business rates in Scotland is forecast to be £2.8 billion this year, up from £2.07bn in 2010-11.

Other business groups to sign the letter include the British Aggregates Association, the Scottish Grocers Federation, the Scottish Tourism Alliance, British Hospitality Association Scotland, the Scottish Food and Drink Federation and the Scottish Property Federation (SPF).

The SPF also yesterday called for the 5 per cent threshold of the residential land and buildings transaction tax (LBTT) – which replaced stamp duty – to be raised to £500,000 in light of figures which had pointed to a downturn in the value and number of transactions in the first year of the tax.

The federation said that the main impact has been at the high value end of the market, above £325,000.

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SPF director David Melhuish said: “If you make it harder for people to move at the higher end of the market, then it makes it more difficult for people aspiring to move into that market. This then makes is more difficult for people to get a foot in the housing market at all.”