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No matter the referendum outcome, fairer rates must figure

Scotland is just five months away from our most important constitutional decision in over 300 years and, understandably, this has inspired a healthy debate about what Scotland's future tax framework might look like, either under independence or in a devolved context.

What might fiscal policy look like in an independent Scotland? How could the basket of taxes be grown with further devolution? These are important questions but politicians should not lose sight of the taxes we already have control over in Scotland.

For businesses, one of the most important taxes is Non-Domestic Rates or Business Rates. Through this tax, Scottish businesses are paying almost £2.7 billion this year to help fund public services - a not inconsiderable sum and around 10% of the Scottish Government's current annual budget. However, there are a number of fundamental problems with this tax.

Firstly, this is a tax which is ratcheted upwards by government, whatever the economic climate. Since 2010, during a turbulent time for the Scottish economy, the amount taken from business by government through business rates has increased by 30%, with the rate of tax being increased year on year, not just in Scotland but across the UK. Secondly, it is a tax which actively penalises the kind of investment that our economy needs in order to make the current growth path sustainable.

Imagine a small business looking to spend to expand its premises and create new jobs - the result in terms of business rates liability would be a higher rateable value and a higher bill.

Finally, current rateable values are pegged to April 2008 - the peak of the market before the recession - and they will remain like this until 2017. Not ideal at a time when we are trying to reinvigorate our high streets and retail sector more generally.

Business rates are no longer fit for purpose but, as Scotland stands at a constitutional crossroads, there has never been a better time to re-examine this tax to find a better way for businesses to help finance the Scotland we want to see, while rewarding growth and investment.

As Scotland approaches its constitutional decision, we would urge politicians to seize the opportunity to tackle this business tax with both hands. In the wake of September's vote, whatever the outcome, let's work together to prove that Scotland can lead the way forward towards a fairer and more responsive business rates system.

Garry Clark is head of policy and public affairs at Scottish Chambers of Commerce

Contextual targeting label: 
Business

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