Business figures say levy stifles growth

Decision to double the large business supplement a controversial one

Business leaders in Tayside and Fife have warned a multi-million-pound rates levy on large companies is stifling growth.

New figures show a controversial Scottish Government decision to double the large businesses supplement will cost firms in Tayside and Fife an additional £7 million in rates next year.

Doubling the large businesses supplement from 1.3p in the pound to 2.6p was described as a “modest increase” when announced by then finance secretary John Swinney in September 2016.

However, the Government has revealed it expects the levy to bring in £127.8m in 2018-19 – £63.9m more than if the rate had been kept the same as the English level.

The levy is applied to any site with a rateable value of more than £35,000 and affects around one in eight commercial premises in Scotland.

In Dundee, the Government expects 708 properties to be liable for the levy next year, bringing in £2.9m.

In Fife, the levy will affect 1,037 sites, costing £7.6m. In Perth and Kinross it is anticipated 535 buildings will be charged £2.2m and in Angus 273 premises will have a £1.1m bill.

Alan Mitchell, chief executive of Fife Chamber of Commerce, said he was concerned the levy, and other taxes such as income tax and land and buildings tax, could potentially lead to businesses leaving the kingdom.

He said: “At the very least we need a competitive tax regime with our closest and biggest trading partner and with a country whose companies we are competing with for overseas business.

“It cannot be good for businesses in Fife and Scotland if they are immediately loaded with extra costs their counterparts and competitors in England are not.

“Fife companies are very proud they are Fife companies and many of them grow and stay based here.

“But if there comes a point where it becomes too expensive to trade in this country then ultimately they will have to make the decision they think is right for the long-term viability of the company.

“That could mean they consider moving out of Fife.”

Dundee and Angus Chamber of Commerce head Alison Henderson said she is concerned the levy means the cost of doing business in Scotland is more than in England.

She said: “It’s important Scotland can be as competitive as possible in order for our business community to thrive, invest and employ people.

“Business rates are just one of the costs a business pays and of course a business will make decisions to invest based on a number of criteria.

“But businesses make difficult decisions based on the big picture and a higher large business rates supplement is not conducive to encouraging business growth.”

David Lonsdale, the director of the Scottish Retail Consortium, called for the Scottish Government to reduce the levy back to the 1.3p level.

He said: “We’ve still to hear a convincing explanation as to why medium sized and larger firms here are thought to be better placed to fork out more in business rates than competitors or counterparts down south.

“As advocated by the Barclay review, who described the supplement as ‘damaging perceptions’ of Scotland, we would like to see a more ambitious timetable for ending this Scotland-only surcharge and restoring a level playing field with England.”

Projected large business supplement for 2018-19

Aberdeenshire 984 properties – £5m Angus 273 properties - £1.1m Dundee 708 properties - £2.9m Fife 1,037 properties - £7.6m Perth and Kinross 535 properties - £2.2m Scotland 22,204 properties £127.8m

Dunnikier House Hotel, which has seen a steep rise in rates, and Alan Mitchell, chief executive of Fife Chamber of Commerce.