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Business fears interests will be overlooked in Tax reforms

Colin Borland 3Business groups have expressed concern that their interests may get overlooked in the Scottish government’s planned replacement for Council Tax.

The Federation of Small Businesses says the remit handed to a newly-appointed commission is “ambiguous” about whether business rates are included.

It says business raises a substantial amount in rates for Scottish councils and the FSB will be seeking answers to avoid firms being treated as “an after-thought” in the reform process.

Colin Borland (pictured), FSB Scotland’s head of external affairs, said: “Business rates raise over £2billion a year for Scottish councils – roughly the same amount as council tax. The remit of this commission is unhelpfully ambiguous on whether or not they’re included in this review.

“While the FSB has pushed for serious reform of non-domestic rates, they can’t be treated as an afterthought in this forum. We’ll be writing to the Scottish Government to seek clarity on this matter.”

Retailers are also concerned that the replacement tax does not simply push the burden on to employers or weaken take home pay that reduces the disposable income of employees.

David Lonsdale, director of the Scottish Retail Consortium, said new tax-raising powers handed to Holyrood via the 2012 Scotland Act and the Smith Commission Agreement means it will be able to exert significant influence over take home pay and disposable incomes over the coming years.

He has previously warned against any moves which would mean people in Scotland paying more in tax than those elsewhere in the UK.

“The recovery in consumer confidence remains fragile however, and brings into sharp focus big upcoming public policy decisions which could affect disposable incomes and take home pay, notably the First Minister’s proposed replacement of council tax and the setting of the Scottish rate of income tax. These decisions must support consumer spending and economic growth,” he said.

The Scottish Government yesterday unveiled the membership of the Commission on Local Tax Reform. It comprises 11 representatives of political parties and the finance, law and advice sectors who will examine alternatives to the council tax to fund local government services.

The Commission will be co-chaired by Local Government Minister Marco Biagi and President of COSLA Councillor David O’Neill. The Commission will meet for first time on Monday and will report to the Scottish Government and COSLA in the autumn.

Mr Biagi said: “The Scottish Government believes the current council tax system is unfair and we are acting on our manifesto commitment, and the recommendations of the Local Government and Regeneration Committee, to look at alternative approaches to local taxation.

“The Commission on Local Tax Reform will consider progressive, workable and fair systems, taking into account domestic and international evidence on tax powers and wealth distribution, the autonomy and accountability of local government and the impact on individuals who pay the tax.

“The members bring a broad range of expertise and experience and I look forward to starting this important work.”

Mr O’Neill said: “A great deal of work lies ahead, but this commission is a chance to take a step back and think about the best way to pay for the local services that communities rely on every day.

“Across Scotland people are looking for the debate to break new ground, and that’s why I am determined that this Commission will be listening to people and organisations from all parts of the country, and setting out what it would take to give our local communities a real say about what matters most to them, and the best way to pay for it.”

Members of the Commission are:

The Commission’s remit is:

“To identify and examine alternative systems of local taxation that would deliver a fairer system of local taxation to support the funding of services delivered by local government. In doing so, the Commission will consider:

In conducting its work, the Commission will engage with communities across Scotland to assess public perceptions of the emerging findings and to reflect this evidence in its final analysis and recommendations.

The Commission will be supported by an independent secretariat comprising staff seconded from COSLA and the Scottish Government.

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