Finance Secretary Derek Mackay last night rejected proposals to increase the business rates paid by the trusts running local authority sporting and cultural facilities.
Mr Mackay bowed to political pressure that had built up against the controversial recommendation made in the Barclay Review into business rates conducted for the Scottish Government.
Opponents of the plan – nicknamed the “swim tax” – had argued the business rates hikes would add millions of pounds to tax bills and mean the closure of swimming pools, leisure centres, libraries, museums and parks.
The Scottish Government review into business rates proposed that Arms Length External Organisations (ALEOs), which run facilities for councils, should no longer be eligible for charitable trust business rates relief.
But Mr Mackay announced he would not go ahead with the proposal on the eve of a Holyrood debate, which would have seen the SNP defeated on the issue had the government argued for the proposal.
Mr Mackay has yet to disclose what he intends to do about a similar recommendation in Barclay Review which would dramatically increase the business rates bill paid by private schools.
Headteachers in the sector have argued that ending rates relief on their institutions would force up fees and cut the amount of money available for bursaries for children from poorer families.
Mr Mackay said: “In my response to the Barclay review I made clear that this was a recommendation that I wished to engage on before coming to a conclusion. In these discussions I have heard a strong and consistent message about the importance of this benefit to sports and leisure facilities and to keeping the costs of these services affordable especially in disadvantaged and vulnerable communities.
“As a result I can confirm that the rates relief will remain in place for qualifying facilities operated by council ALEOs.
“However, I am aware that some councils are planning to increase the numbers of ALEOs and the number of facilities no longer paying rates. It is my intention to mitigate against this by offsetting any further charity relief benefit to councils to deter future ALEO expansion.”
Conservative finance spokesman Murdo Fraser said: “This is a major victory for the Scottish Conservatives and for the Scottish Parliament as a whole. Derek MacKay has now been forced to bow to the inevitable and U-turn on his tax grab.”