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Majority of SMEs oppose plan to switch rates to councils

Andrew McRae

Andrew McRae: ‘businesses face a Frankenstein’s monster’

Three quarters of Scottish firms believe that handing control of business rates to the 32 local councils would be bad for business, according to a new survey.

The poll – conducted over the last month – also shows that seven in 10 businesses oppose a proposal by opposition MSPs to scrap the uniform business rate.

Four in five businesses disagree with moves to abolish national rates reliefs, like the Small Business Bonus, even with the option for councils to develop their own replacement schemes. 

The survey from the Federation of Small Businesses (FSB) comes ahead of a crunch Holyrood vote, expected over the next four weeks, where MSPs will debate the final stage of the legislation crucial to the future of Scottish rates system.

The amendment to the Non-Domestic Rates Bill, proposed by Green MSP Andy Wightman and backed by other members, has prompted an outcry from business. Earlier this week 27 trade bodies signed a letter calling on the parliament to reject the proposal. Public Finance Minister Kate Forbes has added her support to the business groups.

If the Small Business Bonus scheme – a Scotland-wide rate relief – is abolished, some smaller businesses could face a business rate hike of more than £7,000.

Andrew McRae, FSB’s Scotland policy chairman, said: “At the moment, Scottish smaller businesses face a Frankenstein’s monster of rates changes and the risk of a £7,000 tax hike. No wonder then that our survey shows that a clear majority of Scottish firms are opposed to this move. 

“Scottish smaller businesses are already facing punishing overheads and an unpredictable economic future. Ending the uniform business rate as well as national rates reliefs risks undermining independent Scottish firms.”

The Scottish Government has signalled their intention to attempt to reverse these amendments at Stage 3, but they will require the support of a number of opposition MSPs.

Andrew McRae said: “The business rates bill going through parliament is mostly sensible, if you excise the ill-considered measures added at Stage 2. Any MSP that supports local independent firms must vote to remove these damaging amendments and return this legislation to reflect its original intentions.”

Only around one in ten firms believe giving new rates powers to councils would have a positive impact on businesses. Similarly only 9% of respondents signalled that they would support the end of national reliefs, and only 16% of businesses wanted overall control of bills passed to councils. The remainder of the respondents across all questions signalled they didn’t know.  

Business rates generate £2.8 billion for Scottish local authorities.



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