Labour say vital tax breaks on new developments built by public trusts will effectively end as part of an overhaul of Scotland’s system of business rates which may leave many proposed new developments “unaffordable”.

The plans are at the heart of Finance Secretary Derek Mackay’s budget which will be passed by MSPs at Holyrood this week. But there are fears it could undermine efforts to improve the nation’s health by pricing people out of physical activity.

Labour North east MSP Jenny Marra said: “These proposed changes mean local authorities will struggle to build new sports and cultural facilities – condemning communities across Scotland to crumbling sports centres and run-down libraries.

There are concerns that proposed changes would mean local authorities will struggle to build new sports and cultural facilities. Picture: Jane Barlow

“There are a number of stories from across Scotland showing the harm these changes will cause.

“It is bad enough that Derek Mackay plans to take more money out of council budgets, hampering the work they do but it is inconceivable the Cabinet Secretary for Health and Sport, Shona Robison, believes taxing sport and physical activity is the right way forward.

“The way to improve our children’s health is to encourage physical activity, not make it unaffordable.

“The SNP Government must abandon these regressive plans for a sport trax before the budget on Wednesday.”

A national review of Scotland’s system of business rates published last year called for an end to rates relief for bodies like arms length organisations (ALEOs) which runs sports and leisure facilities for local authorities, such as Edinburgh Leisure in the capital. However, they won a reprieve when Mr Mackay said he would keep the tax break for existing ALEOs but tax breaks will end for new ALEOs.

Labour also confirmed yesterday correspondence obtained by Ms Marra from the Finance Secretary indicates that while new developments built by existing ALEOs may get an upfront tax break, it will be clawed back by ministers from the overall local authority grant.

It is feared a number of projects around the country could be hit by unexpected bills or face the axe. In Aberdeenshire, proposals to move culture and sport within a trust model have already been axed amid concerns it would cost an extra £600,000 in the first year alone, compared with the £500,000 per saving originally expected.

Plans for a new indoor tennis facility in Inverclyde could also be hit by a rise in costs, according to Labour. It is understood Inverclyde Leisure and Inverclyde Council have agreed to put up two- thirds of the local funding on the basis the other third would come from the £15m national pot.

In Dundee the Menzieshill Community Centre, which has already won planning permission, is likely to face an additional tax bill of about £200,000 when it goes ahead.

A Scottish Government spokeswoman said new developments will continue to be eligible for relief, but if any new relief exceeds amounts currently provided to council ALEOs, around £45 million, this additional relief benefit will be offset against grant allocation in the local government finance settlement.

A Scottish Government spokesperson said: “Leisure and cultural venues currently run by council arm’s-length bodies will continue to benefit from charity relief from non-domestic rates, following our recent rejection of the recommendation from the external Barclay review to end this relief. However, to mitigate against further expansion of arm’s-length bodies, and to ensure the right balance between rates liabilities and protecting local services, we have decided to offset any additional relief benefit to councils.”

Call to scrap '˜sport tax' plan amid fears for future of grassroots facilities