Business split over taxing Scottish budget

Business groups are split over Scottish government plans to introduce a new levy on large retailers.

Finance Secretary John Swinney announced the move when he delivered his budget plans.

Some business groups also criticised his plans to charge business rates on properties that are lying empty.

But there was a welcome for the shift of funding from revenue spending to capital spending on projects which are intended to help the economy grow.

Alcohol and tobacco

CBI Scotland, which represents larger employers, said it welcomed projects that provided employment in the short term and helped to build Scotland's economy in the longer term.

However, CBI Scotland director Iain McMillan said it was "alarming" that the Scottish government was proposing two business tax rises, after it had to abandon plans for a £30m levy on out-of-town retailers in its budget plans last year.

The plan to tax large retailers selling alcohol and tobacco is intended to raise £30m in the year from next April, rising to £40m per year after that.

If approved, it will apply from April 2012 to retail properties with a rateable value of more than £300,000.

It could be an incentive to some of them to stop stocking tobacco.

Mr McMillan claimed the new levy was "a fundamental breach" of the SNP government promise to ensure businesses were no worse off in their tax bill than south of the border.

He added: "Also industrial and commercial buildings are rarely left empty by choice, particularly when they don't generate an income, and a tax rise on empty properties could see new developments curtailed.

"If the Scottish government can't be trusted on business rates, what would they do with powers over corporation tax were that tax to be devolved?"

The Federation of Small Businesses welcomed the retail levy on supermarket chains, saying a more proportionate level of rates for out-of-town stores would be welcomed on the high street.

Capital spending

Andy Willox, its Scottish convener, said a change to the relief on empty property rates was welcome.

He said: "We need a system which encourages vacant town centre business properties to be filled, while not hammering small landlords who lose a tenant through no fault of their own."

The Scottish Chambers of Commerce praised the shift to capital spending, particularly for transport projects.

It also welcomed the continuation of the Small Business Bonus Scheme, which cuts business rates for some enterprises.

But spokesman Garry Clarke said the two increases in business taxation were "potential bad news".

The Scottish Council for Development and Industry, the broad-based business and economy group, raised concerns about the £120m cut in Scottish Water's capital programme.

It also raised concern about the squeeze on economic development budgets at national and local level.

There was disagreement on the shift of revenue to capital spending from the Scottish Trades Union Congress, which said it was "robbing Peter to pay Paul", without adding to demand and it would harm public service provision.

Mr Swinney's budget speech also included a pledge to review the system of business rates.