Politicians of all parties have backed plans by Scotland’s biggest council to name and shame businesses that dodge rates.
The Herald revealed on Saturday that SNP-run Glasgow will start outing firms that fail to pay local taxes early in the new financial year.
Local authorities across Scotland fail to collect up £50 million in non-domestic rates every year even as they enter their 12th year of austerity. Frustrated council insiders are particularly irritated by firms that ‘phoenix” – go bust in name only before rising from the ashes and continuing to trade.
However, some opposition leaders believe publicity alone is not enough.
Graham Simpson, local government spokesman for the Scottish Conservatives, welcomed the initiative.
READ MORE: Council at war: On the front line of the business rates non-payment scandal
The MSP said: “There’s no excuse for people or businesses who deliberately avoid paying taxes.
“If councils believe a naming and shaming policy will help collect more in non-domestic rates, then they should be allowed to explore that.”
West Dunbartonshire is believed to be the first council to adopt the strategy, with Glasgow the second. But the sheer scale of the city means other local authorities are now watching carefully to see whether a high-profile shaming campaign has impact.
Glasgow City Council treasurer Allan Gow said: “It is an open secret a minority of firms exploit legal loopholes to walk away from tens and even hundreds of thousands of pounds worth of debt, over and over again.
“While the law can’t always help us stop these firms from gaming the system; we can give communities and consumers the information we have and let them make up their own minds about that kind of behaviour.”
New rates legislation brings some tightening of wider anti-avoidance schemes. However, some politicians believe more needs to be done and that naming and shaming, on its own, is not enough.
Labour MSP Sarah Boyack said: “We value the contributions of businesses to our cities and high streets, but when certain businesses evade rates, it has a negative impact. It is unfair on councils who depend on the collection of revenues to fund vital services, and it is also unfair on the vast majority of businesses who pay their share.
“The key issue here is tax avoidance. What we need is for the Scottish Government and councils to work together more effectively to address the issue.
“In the discussions on the recently passed legislation on non-domestic rates I raised the issue of tax evasion. We now need to see action on solutions to ensure the collection of business revenues are reasonable, effective and completed on time.”
Non-domestic rates is usually considered to be a property tax. However, it is the occupier of property that pays, and not the owner.
Andy Wightman, Scottish Greens MSP, is not sure naming and shaming alone would be enough stop a property owner repeatedly signing leases with businesses that go under without paying the tax.
He said: “Councils are frequently placed in an impossible situation of trying to recover non-domestic rates debt from companies that no longer exist, only to find they have been replaced by a very similar set-up.
READ MORE: Firms dodging rates to be named and shamed in city crackdown
“I can understand why councils are taking this step, but it’s not clear naming and shaming will be effective in such cases. That’s why councils need more powers to transfer the liability to owners in exceptional circumstances, especially if a property has seen repeated use
of such a tactic.
“I put forward proposals to give councils this power that were rejected by the Scottish Government, but I think the fact councils are going public with this problem shows the need is greater than ever.”
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