SOME of Britain's biggest retailers have warned stores could be forced to shed jobs in Scotland unless business rates are overhauled.

Boots, Marks & Spencer and John Lewis are among 40 firms and business organisations that have called for a fundamental reform of non-domestic rates.

They say business rates, which raise £2.8billion, place an "unsustainable burden" on them.

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In an open letter to The Herald, they describe rates as "a tax on jobs and growth" that "acts as a drag on the Scottish economy".

They urge all of Scotland's political parties to commit to a review of the system in their manifestos for next year's Holyrood election.

John Swinney, the Finance Secretary, defended Scotland's business tax regime as "already the most competitive in the UK".

The call for reform has been co-ordinated by the Scottish Retail Consortium, which represents big store groups and supermarkets, backed by a number of other organisations from the manufacturing, engineering, accountancy, tourism and leisure, publishing and commercial property sectors.

Other firms supporting the move range from Harvey Nichols, the upmarket department store, to high street bakers Greggs.

The list, available in full on The Herald's website, heraldscotland.com, also includes Lloyds Pharmacy, Paper Tiger, Schuh, Sterling Furniture and Watt Brothers.

David Lonsdale, director of the SRC, said: "This is a powerful statement from a broad and formidable cross section of business and industry in Scotland that the business rates system is out of date, no longer fit for purpose and in serious need of fundamental reform.

"The current system is a tax on jobs and growth, undermining investment in property.

"There is no greater pressing issue for a wide range of business sectors and industries in Scotland than the prohibitive burden of business rates."

Warning of job losses, he added: "This is not just a problem for firms.

"Business failures have a profound and damaging impact on communities through job losses, inward investment and a loss in government revenue through the forfeit of other taxes.

"In the retail industry alone, there have been over 3500 jobs lost over the past year with the risk of losing more unless this tax on jobs and investment is reformed to support business growth and employment."

More than 250,000 Scots work in the retail sector, close to one in eight of the workforce.

Business rates are based on the rateable value of a company's premises, multiplied by a "poundage" which is set annually by the Scottish Government.

Larger businesses occupying property with

a rateable value above £35,000 pay a supplement, which subsidises a rates relief scheme affecting almost 100,000 smaller premises.

The poundage this year is 48p in the £1 with a 1.3p supplement for larger businesses.

For much of the previous decade, the Scottish poundage rate was significantly higher than south of the Border but was brought into line with the English level by Mr Swinney in 2007.

In addition, the Finance Secretary last month handed councils powers to reduce business rates in their areas, a move welcomed by business organisations.

Revenues raised by business rates are retained by councils and help pay for local services.

But the Scottish Retail Consortium argued the system does not "flex" to reflect changing economic circumstances and takes no account of a firm's profitability.

As a result, it says, tax take from business rates has soared by 42 per cent since 2007, despite the past eight years being among the toughest the retail sector has faced in decades.

By contrast, revenue from council tax, the equivalent domestic property tax, has risen by just seven per over the same period after it was frozen by ministers.

A Scottish Government-backed commission is currently looking at alternatives to the council tax, with a view to presenting political parties with a range of options ahead of next year's election.

Mr Swinney said the business rates system was under "active review" and called for "constructive proposals" from companies.

He added: "Scotland’s business tax environment is already the most competitive in the UK.

"This has reduced business rates for many since 2007, with around two thirds of retail premises in Scotland benefitting from rates relief."