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Retail chief demands Holyrood rethink on taxes

David LonsdaleA business organisation today calls on Scottish ministers to scrap a range of tax rises to avoid threatening the country’s competitiveness.

The Scottish Retail Consortium (SRC) warns the Scottish Government against using new powers to impose additional levies on business when it produces its Budget and Spending Review next month.

It is concerned about a lack of commitment to cutting business rates, the imposition of a Scotland-only big retailer surcharge, and plans to introduce a new ‘bottle’ tax.

In a new paper ‘Open for Business: Growing a more productive and competitive Scottish economy’ submitted to the Scottish Finance Secretary, the SRC highlights the profound changes affecting the high street.

It lists the added costs facing retailers through business rates such as the apprenticeship levy, and business rates. 

With the devolution of further new powers, along with the uncertainty following the Brexit vote, the SRC believes there is an urgent need for the Scottish Government to take “tangible action” to support Scotland’s largest private sector employer, providing 253,000 jobs, 

 Specifically, the SRC is recommending that Scottish Ministers:

– Work with the industry to deliver a retail strategy which sets out a clear road-map for future tax and regulatory changes for the decade ahead

– Bolster consumer confidence by keeping a firm grip on personal tax rates, and re-evaluate whether the current plans for increases in personal taxation in 2017-18 remain sensible

– Press ahead with fundamental reform of business rates so that a modernised, sustainable, strategically coherent and competitive rates system can be in place shortly after the Barclay Review reports

– Scrap the £62.4 million annual ‘Large Business Rates Surcharge’ which affects 29,000 firms, and restore poundage rate parity with England

– Ensure firms in Scotland which pay the Apprenticeship Levy directly benefit from it

– Shelve the mooted Scotland-only deposit return scheme for drinks containers, a ‘bottle tax’ which would push up prices for consumers 

David Lonsdale (pictured), director of the Scottish Retail Consortium, said: “The retail industry was going through an unprecedented period of transition before the vote to leave the EU. With that added uncertainty, the Scottish retail industry faces significant challenges.”

He says the Holyrood government’s new powers over personal taxation can have an “immense impact” on the health of Scottish retailers. 

“That’s why we argue now is not the time to raise taxes on the vast majority of working Scots, which would of course impact on their discretionary spending.

“However, the Scottish Government should go further and look to reduce the burdens on retailers so they are at the very least no more onerous than elsewhere in the UK.

“That means scrapping the unfair Scotland-only large business rates surcharge, working with firms to ensure they directly benefit from the Apprenticeship Levy monies, and developing a joint government/industry retail strategy to support small, medium and large retailers across the country.”

Mr Lonsdale says the Scottish Government is rightly concerned about the potential economic impact of the Brexit vote on Scotland.

“However, they have the powers at hand right now to do more to encourage growth and promote productivity in Scotland. With half of VAT receipts being assigned to the Scottish Parliament our politicians at Holyrood have a direct stake in facilitating a flourishing retail industry. Retailers will be looking to the Finance Secretary to act when he brings forward his Budget later this year.”

The Scottish Chambers of Commerce has expressed alarm at the Scottish government’s approach t business rates, in particular Economy Secretary Keith Brown’s comments that the Scottish Government had no plans to cut Business Rates.

The Chambers said that “inaction on Business Rates is no longer an option”, given that next April’s revaluation of rates in Scotland will take no account of the economic impact of either Brexit or persistent low oil prices. 

Liz CameronLiz Cameron, chief executive, said: “Scotland’s business rates will be revalued in less than eight months’ time but the values that will apply are based on the economy as it was on 1 April 2015 – over a year before the EU referendum and before the worst effects of persistent low oil prices became apparent. 

“If the Scottish Government chooses to do nothing about next year’s rates bills, then businesses will be hit with valuations that bear no relevance to the economic conditions they will be facing next year.

“The Scottish Government has the power to remedy this situation now, before the impact is felt.  It can use its devolved powers to ensure that next year’s valuations are based on current economic conditions, not the artificially high levels associated with an April 2015 valuation.

“If it fails to do so, then it is failing Scottish business at a time when we need a supportive Government and is adding to the iniquity of the current Business Rates system.

“Whilst we acknowledge the Scottish Government’s business rates review group will be meeting shortly, it will not report until next July – three months after the revaluation. 

“Action is required now to prevent a damaging revaluation next April hitting the cost base of businesses across Scotland at a time when they can least afford it.  Inaction is no longer an option for the Scottish Government on business rates.  This is a rates time bomb that must be defused now.”

 

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