Finance Secretary softens blow
Mackay to unveil concessions to head off rates revolt
Finance secretary Derek Mackay will unveil a series of concessions on business rates today to head off growing hostility over soaring costs from companies and opposition politicians.
Mr Mackay will propose measures to soften the blow over revaluation which has prompted threats of non-payment amid warnings that some businesses could be forced to close.
There will be a cut in the tax rate applying a property’s rateable value and the threshold on the large business supplement will be raised.
The Scottish Government says under current plans seven out of ten business properties will be subject to the same rates or less, next year – with half paying nothing at all.
Speaking ahead of today’s debate on the Finance Bill, Mr Mackay said: “I have set out a competitive package of measures to give small and medium enterprises the security and confidence to grow in these tough economic times.
“Under the Small Business Bonus Scheme 100,000 properties will pay no rates at all next year and a further 3,500 properties will benefit from 25% relief. This package means around 9,000 properties will be up to £7,000 a year better off than their equivalents in England.
“Additionally we are cutting the tax rate that applies to a property’s rateable value by 3.7% to 46.6p in the pound so even some properties with values going up will see their bills go down.
“And to help larger firms we have increased the threshold for the large business supplement, meaning that 8,000 fewer premises will pay it.”
Mr Mackay said: “These actions worth £155 million, with an overall package of reliefs worth £600m, mean seven out of ten business premises in Scotland will pay either the same rates or less next year – with more than half paying nothing at all.”
He pledged to offer more initiatives today to bolster the flagging economy.
“Before the new property values came out I took action to support business,” he said. “Since then I have been listening to firms across Scotland and today I will set out further steps to support Scotland’s economy.”
Opposition parties and business organisations have led calls for the revaluation to be re-visited and even the pro-nationalist Business for Scotland group said the rate rises are “not manageable in the current economic climate”.
Gordon MacIntyre-Kemp (right), the chief executive of Business for Scotland, yesterday called on the Scottish Government to step up and be “the champion of the business community on rates” and to propose a robust set of rates relief measures that protect business from rapid rates rises and therefore protect jobs and economic growth.
He said the organisation’s membership of more than 4,000 businesses across Scotland included many which have been impacted by the non-domestic rates evaluation.
Mr MacIntyre-Kemp added: “Business for Scotland has provided evidence to the Scottish Government and asked for many changes to the rates system and, so far on rates relief on empty buildings, the Scottish Government has proven to be flexible.
“Rates increases are an issue across the whole of the UK, but the Scottish Government has an opportunity to intervene and create a competitive advantage for Scottish businesses in direct comparison to the UK Government’s complete mismanagement of Brexit. The Scottish Government must step up for Scottish businesses and it must do it soon.”.
Scottish Labour said the NHS faces a £30m rates rise while retailer Sports Direct could see its business rates bill fall in Scotland as a result of the current revaluation.
Analysis by Labour reveals that Sports Direct properties in Scotland have been valued at almost £1million less than previously – a 14% reduction.
It also said Scotland’s largest university buildings will, on average, see a 25% increase in the valuation of their estates
However, the retail sector is campaigning for lower business rates, particularly on larger shops, which are regarded as a cost burden along with rises in the minimum wage.
Scottish Conservative shadow finance secretary Murdo Fraser said businesses are keen to know what steps the government is proposing.
“This is fast-becoming a crisis, affecting organisations large and small, and in all areas of the country,” he said.
“The SNP needs to take urgent action.”
The Scottish Conservatives are warning the SNP that they must “mind the gap” with the rest of the UK ahead of today’s key vote on tax rates.
The Scottish Parliament will vote for the first time to set new rates of income tax, following the successful implementation of the Scotland Act.
The SNP Government – supported by the Greens – will propose that the threshold for middle earners will not rise in line with England.
Scottish Conservative shadow economy secretary Dean Lockhart said: “Over the last 18 months, Scotland’s growth rate has been around a third of that for the UK – with the result that employment is now falling in Scotland.
“The SNP’s plans to set tax rates higher than the rest of the UK will only worsen this growing divide we are seeing, deterring investment and reducing new jobs.
“Our message to the SNP today is clear: it needs to mind the gap. Higher taxes in Scotland means lower growth, which will deliver less cash for government to spend on our vital public services.
“Derek Mackay’s handling of the business rates crisis has shown that this Scottish Government simply does not understand business and the economy.”