Sixteen trade associations, including the Scottish Retail Consortium, Scottish Chambers of Commerce, and Scotch Whisky Association, have voiced their concern over Deputy First Minister and Finance Secretary Shona Robison’s proposal for a business rate surtax on retailers, arguing that it diverges from the government’s promise to collaborate with businesses.
In a joint letter addressed to Ms. Robison, they urge a reconsideration of the plan prior to the Stage 1 debate and vote on the Scottish Budget at Holyrood. This appeal comes in the wake of the shopworkers’ trade union Usdaw also advocating for a cessation of additional taxes on businesses.
In their correspondence, the trade groups highlight that the suggested surtax contradicts the government’s commitment outlined in the New Deal for Business, which aims for a more competitive and simplified business rates framework.
Furthermore, they express concern that such a move may reinforce the perception that Ministers perceive rates primarily as a revenue source rather than a tool to foster essential commercial investment and expansion.
The joint letter was submitted to the Finance Secretary earlier this month:
Dear Deputy First Minister,
Stimulating greater levels of private sector investment is crucial to lifting Scotland’s rate of economic growth and in turn generating the jobs, wealth, and tax revenues to support public services that we all want to see. It is why we have backed the Scottish Government’s ambition for a dynamic, successful economy and attempts to deliver a step change in relations with commerce through the New Deal for Business.
That is why we were dismayed to read in the Scottish Budget that Ministers are considering the introduction of a new business rate surtax on retailers.
It is profoundly concerning that new taxes on business are being countenanced in such an arbitrary way and with apparently little regard to trading or economic conditions. We understand it is being considered to plug a gap in government finances.
The way the announcement was made falls well short of the thrust of the New Deal for Business, which talks of no surprises and involving business at the very inception of policy development. It contradicts New Deal commitments on a more competitive and less complex business rates system. It also reinforces the perception that Ministers view rates more as a revenue generator and less as a means to stimulate much needed commercial investment and growth.
We fully recognise that government over recent years has taken several positive steps on rates, including introducing three-yearly revaluations and retaining the uniform business rate. Yet the business rate for medium-sized and larger commercial premises in Scotland – 22,100 premises across all sectors – is set to soar to a 25-year high from April.
Businesses make investment decisions based on the opportunities ahead but also the costs of operating and predictability of tax and regulatory decisions. A more ad hoc and less predictable approach to business taxes in Scotland sends out a poor message. We fear this move opens the door to other sectors being similarly targeted, particularly if the projected fiscal gap widens.
We therefore urge you to reject introducing fresh complexity, cost, and unpredictability into the rates system with a new surtax, or with similar taxes aimed at other sectors in the future. We want Scotland to be a great place to do business and a clear signal from you that economic growth is the priority would be a positive step.
