Two of Scotland's leading business organisations have hit out at Scottish Government plans that could see the owners of empty retail and commercial property faced with millions of pounds in extra charges.
The proposed additional levy on water and sewerage, which could be imposed as early as April next year, follows a reduction of the rates relief available on empty commercial premises imposed from spring 2013.
Last year's changes - which have boosted Treasury coffers by around £18 million a year - saw the business rates on empty offices, shops and other business properties rise from 50% to 90% of the occupied rate.
Now the Scottish Government wants the owners of empty commercial premises to also pay water and sewerage charges, potentially adding a further 30% in charges if the Government decides to impose the levy at the full rate for occupied premises.
Both the Scottish Retail Consortium (SRC), which represents some of the country's shopkeepers, and the Scottish Property Federation, which represents commercial property owners and developers, have said it would be unfair to further raise the cost of investing in property when the economy has only recently showed signs of emerging from recession.
When the Labour MSP for North-east Scotland, Richard Baker, submitted a written question asking for details of the proposed charges and how much money would be generated, Deputy First Minister Nicola Sturgeon said that a formal consultation on the proposal will be launched before the end of this year which will "seek views on this policy and the date for its introduction". She did not offer an estimate of how much money the new charge will raise.
David Martin, the SRC's head of policy and external affairs, criticised the Government's pre-empting of a promised review into the impact of its earlier decision to reduce relief to the owners of empty premises. That review is expected to get under way in the New Year, but is unlikely to be finalised before next May.
With just under one in 10 retail premises in Scotland lying empty, the Scottish Government hopes that raising levies on empty properties will encourage landlords to fill the spaces. But Martin said this approach is "completely misguided".
He said: "The current system is deterring people from extending or improving their shops because owners are rewarded with higher tax bills if they do so … We need a system that rewards investment."
Martin said the current business rates system is too inflexible, as it is based on the rateable value of premises and imposed regardless of how well a firm or the economy is performing.
Despite the financial crisis and the consequent global recession, the amount raised in non-domestic rates in Scotland rose 21% from £1.9 billion in 2007-08 to £2.3bn in 2012-13.
Martin pointed to the Netherlands, where commercial premises are revalued every year rather than every five or seven years, as is the case in Scotland. He said: "The Dutch system means that property values are always in line with economic conditions."
A Scottish Government spokesman said: "The forthcoming consultation proposes that these empty properties should be charged in line with other businesses, with the additional money generated being used to restrict increases to business water and sewerage charges, thereby benefiting the vast majority of businesses."
But David Melhuish of the Scottish Property Federation said the plan fails to address why commercial properties sometimes remain unoccupied for months at a time.
He said: "There are usually very good reasons for a property being empty, usually lack of demand in the market which is not the fault of the landlord. So further empty property charges through water rates will only add to that burden."
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