Derek MacKay rules out action to ease business tax '˜crisis'

Derek Mackay says a government intervention is unlikely to work. Picture: Andrew Cowan/Scottish Parliament

Opposition MSPs on Holyrood’s finance committee demanded action yesterday amid concerns that many firms in Scotland, particularly in the flagship hospitality industry. are facing increases of up to 250 per cent in their rates valuations. It has prompted warnings that some smaller firms could face lay offs, cutbacks and may even go to the wall.

But Mr MacKay said yesterday: “We’re taking the right decisions around business taxes.”

The finance secretary said “updated forecasts” have identified an extra £60m in business rates in next year’s budget, which made up part of a £220m package of fresh resources unveiled last week. Conservative North East MSP Liam Kerr asked why Mr Mackay was not using the extra cash to “ameliorate the significant problems being faced by businesses in the North-east and elsewhere”.

But Mr MacKay said a government intervention is unlikely to work.

“If we were to do a national transitional relief scheme which exists south of the Border, it’s automatic because of the legislation, the biggest winners from that, so called, would be the national utility companies at the expense of many, many smaller businesses. Many, many would be paying more and have their rates held artificially high to compensate large utility firms. I don’t think that that’s the right balance.”

The minister insisted local councils should provide their own rates relief scheme, but added that measures introduced by the Scottish Government such as the Small Business Bonus will lift many firms out of paying rates altogether.

But Mr Kerr said afterwards: “Mr Mackay’s attitude this morning was unacceptable. Having allowed this crisis to develop on his watch, he now seems to have decided to wash his hands of the problem. The Scottish Government cannot sit idly by while small firms, hotels and pubs, through no fault of their own, face going to the wall because of this SNP tax grab.”

The anger stems from an overhaul of the valuations of non-domestic rates by the independent Scottish Assessors Association. Many firms, particularly in the flagship hospitality industry and in the North-east, which was assessed before the oil price crash, are facing increases of up to 250 per cent. This is then multiplied by the Scottish Government-set poundage of 46.6 pence to determine what they will pay.