‘Thin gruel’ for business as SNP ditches plan for an Amazon tax
DEREK Mackay has been accused of ‘misleading’ businesses after he claimed that Scotland would have the most ‘competitive’ rates system in the UK.
The Finance Secretary yesterday unveiled a package of measures he hopes will provide a boost to the country’s business community.
But he did not mention the thousands of firms forced to pay double that of their counterparts south of the Border.
In his Scottish Budget announcement, Mr Mackay revealed he would cap business rate rises for the next year, and confirmed that plans for a so-called ‘Amazon tax’ had been scrapped.
However, he failed to acknowledge a controversial additional levy for large businesses, which has seen firms north of the Border pay over £43million more in rates than their English rivals since 2016.
Business bosses have issued pleas to Mr Mackay over the large business supplement, urging him to slash the charge – and bring firms in Scotland in line with those elsewhere in the UK.
Despite pledging to cut the levy, he claimed this can only be done when he feels the Government can afford to do so.
Mr Mackay is yet to reveal when this might be, meaning one in eight commercial properties in Scotland pays an additional 2.6p on top of its rates in the form of the large business supplement.
In England the levy is 1.3p, but SNP ministers doubled this in Scotland in 2016.
Graham Howarth, business rates expert at property consultancy Gerald Eve, said: ‘The Scottish Government will trumpet the competitiveness of a small business poundage rate that is lower than the equivalent in England, but in truth this is thin gruel.
‘Not only is a difference of 0.1p unlikely to lead to a stampede of firms from south of the Border, but the competitiveness vanishes for larger firms, who face a supplement that is double the equivalent levy in England.
‘To paint this as a more competitive system than in England is at best disingenuous and at worst misleading.’
Speaking at Holyrood yesterday, Mr Mackay announced he will continue to limit the increase of business rates to the lower Consumer Price Index (CPI) inflation measure, rather than the Retail Price Index (RPI) until 2021.
He also revealed this year the increase in rates poundage would be capped below inflation, with a rise of only 2.1 per cent to 49p.
Mr Mackay said: ‘I have listened carefully to the business community. We are committed to providing the best possible environment for businesses, supported by a competitive non-domestic rates regime.
‘Last year I limited the increase in business rates to CPI inflation. This year I will go further.
‘I am announcing today that we will cap the increase in the rates poundage in 2019-20 in Scotland at a below inflation level of 49p, limiting the increase to 2.1 per cent.
‘I can also confirm that I will continue to uprate the poundage in line with CPI for the remainder of the parliament.’
Mr Mackay claimed this would mean the Scottish Government’s rates system is the ‘most generous anywhere in the United Kingdom’, but this was disputed by experts and critics.
Mr Mackay also used his Budget to confirm plans to force online retailers to pay more tax have been scrapped – as revealed by the Scottish Daily Mail earlier this week.
Proposals for the ‘Amazon tax’ would have given some councils powers to force online and outof-town giants to pay a supplement on their business rates.
But Mr Mackay has ditched the move after Chancellor Philip Hammond unveiled a UK-wide tax on online profits.
Scottish Retail Consortium director David Lonsdale said: ‘With the burden of business rates remaining onerous, it’s right the Finance Secretary has taken action to keep down the headline poundage rate, although he could have gone further. Nonetheless, he has acknowledged our concerns by striking a rate a touch below that in England.
‘We estimate this will shave £2million off the rates bills of retailers in the coming year than would otherwise be the case, albeit rates bills will still rise in April by more than 2 per cent.’
‘Disingenuous at best’