SCOTTISH retailers have heavily criticised the Scottish Government’s “apparent retraction” of a key SNP manifesto pledge.
Public finance minister Tom Arthur failed to give a clear answer when asked today if the government remained committed to restoring parity with England on the higher property business rate - charged to non-domestic properties with a value of £100,000 or more - by the end of this parliament.
He suggested it would depend on available funding.
Mr Arthur said: “We are operating in a very demanding set of fiscal circumstances. However we are committed to when it is affordable and finances allow to meeting that commitment on the higher property rate.”
READ MORE: Retailers warn Scottish firms will pay £60m a year more in rates
The Scottish Retail Consortium said the statement appears to walk back on a commitment made in the 2021 SNP manifesto, and the subsequent Scottish Government Framework for Tax, to restore the level playing with England on the higher property rate “over the course of this parliament”.
The SRC pointed out earlier this year that the higher property rate means firms in Scotland will collectively pay nearly £60 million more in business rates than their counterparts in England in the current financial year.
David Lonsdale, director of the SRC, said: “This apparent retraction of the timetabled commitment to restore the level playing field with England on the higher property rate surtax is incredibly frustrating and troubling, more so given lingering concerns about Scotland’s relative economic underperformance compared to the UK as a whole and the pressing need to lift private sector investment.
“With Scottish ministers having already ignored the recommendation of their own Barclay Review to end this Scotland-only surcharge by 2020, it’s dispiriting they won’t even commit to remove this before this parliament ends despite it being a manifesto commitment.
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“There is no credible justification why firms operating from 11,000 premises in Scotland are apparently thought to better placed to be forking out more in rates than firms in comparable premises in England.
“The surcharge only serves to make life tougher for those retailers affected by making it more expensive to maintain a shop presence on Scotland’s high streets. Ministers need to rethink their stance and urgently pursue a much more ambitious approach towards restoring the level playing field with England on the higher property rate.”
Business rates for non-domestic properties are calculated by multiplying a figure of pence in the pound known as the poundage by the rateable value of the property. In Scotland, the poundage was recently pegged at 49.8p but a higher property rate of 52.4p is applied to properties valued at £100,000 and above.
In England there are two poundage rates, a standard multiplier of 51.2p for properties with a rateable value of £51,000 or more, and 49.9p for buildings valued below £51,000.
The SRC says the application of the higher property rate in Scotland means the owners of around 11,600 non-domestic properties pay £59m more in rates per year because of the differential with England.
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The Scottish Government operates a small business bonus scheme that offers relief on rates for properties with rateable values up to £35,000. Properties with rateable values of up to £12,000 qualify for 100% relief.
The Scottish Government said earlier this year that freezing the poundage at 49.8p “means more than 95% of properties in Scotland continue to be liable for a lower property tax rate than anywhere else in the UK”.
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