VICTORY! SNP IN TAX HIKE U-TURN
Humiliated Finance Minister caves in to Scots firms over business rates – and will announce extra cash help today
SNP ministers will today announce a humiliatingclimbdown on business rates after a massive backlash from firms facing eye-watering increases in their bills.
In a major U-turn, Finance Secretary Derek Mackay will reveal a new ‘package of support’ to help businesses deal with the controversial revaluation of rates – which has left many facing increases of up to 620 per cent from April.
He had previously insisted that the Scottish Government was already doing enough to help, despite fears that the changes could cripple shops, nurseries, hotels, pubs and other companies.
Mr Mackay will deliver a statement to MSPs at Holyrood today after the rebellion over the issue spread to within his own party.
Business for Scotland, a pro-independence campaign group which represents 4,000 firms and has close links to a number of Nationalist MSPs and MPs, yesterday urged the Government to ‘step up and be the champion of the business community on rates’.
And drinks giant Diageo, one of Scotland’s biggest employers, joined the outcry by warning that it will face soaring costs which
will ‘impact on our competitiveness’. In a series of other developments yesterday:
It emerged that Scotland’s crucial whisky industry will be hit hard by the revaluation, with distilleries facing increases of up to 58 per cent;
First Minister Nicola Sturgeon attempted to shrug off the crisis by insisting that Scotland has the best business rates system in the UK;
An SNP-supporting hotelier said that the business rates hikes could ‘bring down the Government’.
The Scottish Government has come under attack for failing to do enough to help firms being hit with business rates rises from April following the first revaluation of ‘rateable value’ in seven years.
This has included a string of prominent business donors and supporters of the SNP.
But the most significant intervention from within the party came yesterday from Business for Scotland, which was set up as a formal campaigner in the 2014 independence referendum and branded an SNP front by critics.
Chief executive Gordon MacIntyre-Kemp said: ‘We need 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.
‘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.’
Just over an hour after the strongly-worded call for action, the Government revealed that Mr Mackay would outline ‘a further package of support that will help businesses in key regions and sectors of the Scottish economy to better deal with the impact of the forthcoming revaluation of business rates’.
Ahead of the statement, Mr Mackay said he had already outlined a ‘competitive package of measures’ to help small and medium-sized firms, and also lowered the ‘poundage’ rate used to work out a firm’s business rates bill.
However, in his first acknowledgment that more needs to be done, he said: ‘Before the new property values came out I took action to support business.
‘Since then I have been listening to firms across Scotland and today I will set out further steps to support Scotland’s economy.’
SNP insiders refused to confirm whether the measures would provide direct financial benefit to individual firms hit by a rates rise.
Mr Mackay had already been due to speak about the issue at Holyrood today, after the Presiding Officer selected a topical question on the issue tabled by Scottish Conservative finance spokesman Murdo Fraser.
Last night, Mr Fraser said: ‘Derek Mackay was warned months ago about the damage that these rates increases could cause but it’s taken until now for him to do anything about it.
‘He’s been dragged to parliament kicking and screaming after we forced him into discussing the issue with an urgent question.
‘It was clear a crisis was emerging but instead of acting the SNP sat back and tried to pretend that it had nothing to do with them.
‘Businesses weren’t buying it, and they’ll now want reassurances that the SNP will take urgent action to redress this situation.
‘They need real help from the Scottish Government, not just a passing of the buck to councils that have already had their funding cut by the SNP.
‘If they don’t take meaningful action we face seeing the Scottish economy suffering, as many businesses across Scotland will be left with no choice but to close.’
An analysis by the Scottish Daily Mail yesterday revealed that our vital whisky industry will be hit hard by the revaluation.
Distilleries and bottling plants across Scotland face rates rises of up to 58 per cent, which could mean the price of whisky soars with costs passed on to the hospitality and tourism sectors.
Drinks firm Diageo, which owns iconic brands including Johnnie Walker, Lagavulin and Smirnoff, said its business rates bill in Scotland will rise by £2.3million.
The Scotch Whisky Association said it was still assessing the potential impact of the rises with members, but urged the Government to ensure that Scotland remains a competitive economy.
The Caol Ila Distillery, near Port Askaig on the island of Islay, is facing one of the steepest rises in business rates, with the cost set to soar by 59 per cent from £32,912 to £52,192 in April. Islay’s Bowmore Distillery is braced for a 56 per cent hike, from £25,652 to £40,076, while family-owned Springbank Distillery in Campbeltown, Argyll, will face a rates rise of 52 per cent, from £25,652 to £39,144.
Rates at Islay’s Ardbeg Distillery are also set to soar by 37 per cent, from £37,628 to £51,726.
A spokesman for Diageo said: ‘As a company with 50 sites, including 29 distilleries, spread across Scotland, Diageo is a significant payer of business rates.
‘Our rates bill has risen steadily over the past eight years. In the last financial year (2015/16), Diageo’s total rates bill in Scotland was £13.7million – almost double the £7million which the company paid in 2008/09. This is partially due to a major capital investment programme in expanding our Scotch whisky business and building renewable energy plants at our distilleries, but it is also a result of business rates policies, such as the “large business supplement”.
‘We expect our annual rates bill to rise by a further £2.3million, a 17 per cent increase, as a result of the current revaluation.
‘We operate in a highly competitive global environment and any increases in tax which add to the cost of doing business can impact on our competitiveness.
‘There are many smaller businesses in Scotland struggling to manage the rates increases they face, particularly our colleagues in the pub and hotel sector.’
It also emerged that Scotland’s universities will face soaring rateable values of 20 per cent, adding up to £5million a year to the annual rates bill for the sector.
SNP-supporting businessman Sandy Fraser, owner of the Oak Tree Inn on the banks of Loch Lomond in Balmaha, Stirlingshire, yesterday joined the outcry.
He said: ‘This will be like Margaret Thatcher’s poll tax and could bring down the Government.’
In a column published yesterday, Miss Sturgeon said the SNP offered ‘the best package of support for small businesses in the UK’ and shrugged off the outcry, saying ‘some lose and some gain’.
However, she added: ‘I appreciate times are tough for business and any rates revaluation will cause concern for some, but I want to reassure firms that my door is always open to new ways we can help.’
Comment – Page 14
‘Dragged to parliament kicking and screaming’ ‘Like Thatcher’s poll tax’