John Swinney launches business rates consultation

Business leaders welcomed the review but had reservations about other announcements on rates

Business leaders have broadly welcomed a consultation launched by the Scottish government on business rates.

Finance Secretary John Swinney said the review aimed to "establish a more user-friendly and transparent rates system".

He also confirmed the next business rates revaluation would not take place until 2017.

Business organisations welcomed the consultation but expressed concern over the decision to hold off on revaluation.

Some also said they were disappointed by a commitment to maintain rate poundage parity with England.

Mr Swinney said the consultation was being launched "to ensure Scotland maintains its competitive advantage".

Among issues raised in the review is the question of whether local authorities should have "a new flexibility" to introduce and fund relief schemes to reflect local circumstances and priorities.

Currently the Scottish government sets the framework for all Scottish reliefs, leaving little scope for councils to vary the relief they offer locally.

In announcing the three-month consultation, Mr Swinney said contributions would inform decisions on the best way forward for businesses and local authorities across Scotland.

He said: "The Scottish government will take the time we need to get reform of the business rates system right.

"Before 2007 the poundage rate in Scotland was set higher than that of the rest of the UK, putting Scottish business at a competitive disadvantage. That is a danger that must be avoided."

Mr Swinney added: "Following the UK government's decision to delay the revaluation in England to 2017, we will ensure our commitment to a competitive business environment is not undermined so we will match that date and reform the business rates system.

"We will undertake the next revaluation as part of a wider examination of business taxes available to us under independence, ensuring Scotland maintains our competitive edge compared to other parts of the UK."

The Scottish Chambers of Commerce (SCC) welcomed the consultation, arguing it was "a vital opportunity for ratepayers to help shape a fairer and more responsive system of non-domestic rating in Scotland".

But it said it was disappointed at the decision by the Scottish government to continue to match the English poundage rate.

'Disappointing'

SCC chief executive Liz Cameron said: "This year, Scottish businesses faced an inflation-busting increase in business rates of 5.6% - almost double the current rate of RPI inflation.

"It is therefore disappointing that this disproportionate rise is likely to be compounded by a likely further increase of 2.6% next year as a result of this announcement by the Scottish government.

"It could have taken a bold pro-business stance and chosen to freeze business rates next year but instead it has chosen to the defer to the UK government to make the final decision on how much Scottish businesses will pay in rates next year."

The Federation of Small Businesses in Scotland also welcomed the consultation but said many of its members would be disappointed with the announcement on revaluation.

Scottish policy convener Andy Willox commented: "By postponing the next revaluation, the Scottish government is allowing business premises' valuations to become dangerously out of date.

"However there is a silver lining in that the Scottish government is using this opportunity to launch a review into the system."

CBI Scotland director Iain McMillan said his organisation welcomed the commitment to maintaining poundage rate parity, which he added would "ensure that the vast majority of firms in Scotland are not put at a cost disadvantage compared to their competitors in England".

He continued: "Unfortunately for retailers, however, the exact opposite is the case, as they remain burdened with a Scottish government-imposed supplementary £95m retail rates levy which simply doesn't apply down south.

"We look forward to responding to the review of business rates."

"There needs to be much more predictability and certainty built in to the business rates system in future, with a move away from the often ad hoc introduction of new business rate taxes such as the recent retail levy and the looming reduction in empty rates relief," he added.