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Report on retail

Tax and rates reform would help revive ghost towns

empty shops in Glasgow

Empty and rundown shops are a blight on town centres (pic: Terry Murden)

Radical changes to the tax and rates system and a ban on out of town retail parks are urgently needed to save Scotland’s high streets, says a new report.

A New Future for Scotland’s Town Centres calls for measures to create new neighbourhoods around community-based activities and supports demands for a tax on online retailers.

Scottish retail leaders responded cautiously to the government-commissioned review, saying that it “reads like a charter for extra cost and complexity”.

But Communities and Local Government Secretary Aileen Campbell said: “The report develops a new vision for the future of our town centres, capturing some of the new found sense of localism, and provides recommendations to help achieve the healthier, fairer, greener, successful towns our communities deserve.”

Retail academic Prof Leigh Sparks of Stirling University who led the Town Centre Action Plan Review Group, said: “The current narrative is too often about the decline or death of the town centre. This is not the case in many of our towns but we can do more and better for all towns. Decline is not inevitable.”

Among the report’s other recommendations is incentivising the housing sector to prioritise town centre living.


It suggests reducing business rates for town centre uses and increasing them elsewhere, including for out-of-town uses.

“In particular it would be beneficial to be able to zero-rate developments and/or operations in a town centre, or even a high street,” it says.

“It would also be sensible to reverse the perverse incentive that has a lower VAT rate on new build than on redevelopment.”

Shop closures

Online businesses are forcing shop closures (pic: Terry Murden)

It calls for a “positive presumption” in favour of mixed use developments on brownfield sites.

“In many cases the out-of-town option is chosen for ease and cheapness; our recommendations are meant to help to rebalance this,” it says.

The authors call for a five-year moratorium on out-of-town developments that involve large volumes of car parking.

“This might be seen as too draconian or too blunt an approach given the likely need for some regionally or nationally important developments on new sites,” says the report.

“Nonetheless a moratorium should be the starting point with exceptions permitted only for nationally important exceptional reasons.”

It demands the introduction of an Out-of-Town Car Parking Space Levy which would “provide local authorities with a revenue stream which could be used to enhance public transport and other active travel modes.”

East Kilbride Retail Park

The report calls for higher taxes on out of town retail parks and car parking

It calls for a digital tax, asking why internet shopping “is so privileged and why are many of these businesses paying so little corporate tax?”

The authors say that digital operators, by not paying business rates, are effectively being allowed to “opt out” of the cost of providing public transport systems, education, social and health care which falls on those that do pay rates.

“Taxation needs to reflect the society we are now and not what we were. Various models of digital tax thus need to be explored as a matter of urgency.”

Local authorities should have access to a Strategic Acquisition Fund to acquire land and buildings where they have “strategic worth to the local town and town centre”.

Albany St litter

Crumbling roads and litter deter shoppers and visitors (pic: Terry Murden)

This could be funded from local authority borrowing but also from other budgets and investment vehicles, including the Scottish National Investment Bank, the Scottish Land Fund and the Vacant and Derelict Land Fund.

Scottish retailers expressed concern that if the measures are adopted it would mean imposing more taxes on already struggling shop owners.

David Lonsdale, director of the Scottish Retail Consortium, said: “We do have concerns about the plethora of frankly reheated ideas for extra taxes and levies it suggests.

“Much of it reads like a charter for extra cost and complexity, pushing up costs on consumers, on firms, and on an already overtaxed retail industry.

David Lonsdale

David Lonsdale: ‘a charter for extra cost’ (pic: Terry Murden)

“For example, business rates are already levied on car parking spaces, so introducing a new tax on out-of-town parking spaces – whether they be at retail or business or industrial parks, or even at park and ride facilities – could see these taxed twice, or potentially even three times if councils use their existing powers to introduce workplace parking levies.

“My question is whether there would be a guarantee that any receipts from the introduction of such levies will be used to reduce the tax burden of those firms located within a town centre?

“There is no such guarantee on ring-fencing as I understand it with the existing workplace parking levy, which is already on the statute book.

“Also, many retailers have premises both within and outwith town centres, so could well find themselves in the crosshairs of any such parking levy e.g. at their HQ, or at any out of town shops they have, or any distribution centres they have etc.”

Call for UK Government to rethink tourist shopping tax

Ahead of a debate in the House of Commons, the SNP has renewed its calls on the UK government to reverse its decision to scrap tax-free shopping for overseas visitors to the UK.

Retail industry leaders and the SNP’s Shadow Transport Secretary Gavin Newlands have raised concerns over the plans to hit duty-free shops that help pay for wider operations at a time when airports are already on their knees.

Business leaders in Scotland – including the Scottish Chambers of Commerce and the Scottish Retail Consortium – have warned that the pandemic has been “hugely challenging” for businesses, and that they are “deeply concerned” at the decision to abolish the VAT-free schemes.

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