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Call for cut to business rates as high street stores struggle

FRESH calls have been made for a cut to business rates after the number of shoppers on Scotland's high streets last month fell and one in ten shops remained empty.

While wet and cold weather was being blamed for the 4.6% decline in the number of bargain-hunters hitting town and city centre stores for the January sales, business leaders said the figures from the British Retail Consortium (BRC) and Springboard retail footfall monitor underlined an urgent need to reform the system.

Currently, shop owners pay a tax based on the value of their premises and have the right to appeal against the valuation.

David Lonsdale, director of the Scottish Retail Consortium (SRC), said: "We can't get away from the fact that over one in 10 retail premises in Scotland are sitting empty.

"One need only look at their own local high street to see the impact this is having and a constant reminder of why reform of the business rates system is so important."

"When I speak to firms, they tell me the confidence to invest is being held back by the prospect of shelling out even more for ­business rates. While our corporation tax rates are looking more competitive compared to other countries in the world, our commercial property taxes have somehow been allowed to end up becoming the highest in Europe."

Mr Lonsdale also revealed the SRC was working with the Scottish Government and had appointed tax experts Ernst&Young to help draw up detailed proposals for reform.

Yesterday he added that the drop in shopper numbers in ­January was consistent with a similar fall in December, while the vacancy figure was unchanged from the previous quarter.

The latest figures show there were 1.8% fewer shoppers in total across Scotland this January compared to last year, which is consistent with a 1.9% fall seen in the previous month.

Mr Lonsdale said: "We won't know for certain until the January sales figures are published if the decline in visits leads directly to an impact on sales; however, it isn't encouraging news for retailers in Scotland."

Business rates generate £2.4 billion in tax revenues each year in Scotland and this is set to swell by a further £400m a year by 2015/16. The property-intensive retail industry contributes more than one-quarter of these revenues.

In contrast to the Scottish picture, the UK as a whole recorded its best footfall performance since December 2011.

Diane Wehrle, retail insights director at Springboard, said the figures showed Scotland's retailers were "less resilient" in January than the UK's as a whole.

The weather clearly had an impact, as footfall in high streets fell by 4.6%, a far more significant drop than the fall of 0.6% in high streets across the UK.

However, while bad weather makes enclosed environments offered by shopping centres more attractive to shoppers, a drop in footfall in Scotland's shopping centres (as opposed to out of town malls) of 1.6% - compared with a 2.4% increase for the UK -suggests an underlying vulnerability.

Last year, a report by the ­Federation of Small Businesses (FSB) in Scotland said three out of five firms found business rates "incomprehensible" and one in five did not know they could appeal against valuations.

The last re-valuation of ­business premises was in 2010, based on data gathered before the downturn in 2008, but only 18% of FSB members appealed against the taxes.

A Scottish Government ­spokeswoman said: "We are ­delivering the most competitive business tax environment anywhere in the UK through our business rates policies.

"The Scottish Retail ­Consortium is currently ­analysing the system in place and we are working constructively with them on this."

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