The 1,440 small Western Isles businesses could potentially find themselves paying Comhairle nan Eilean Siar £2.2 million a year collectively, and some perhaps more than £7,000 individually, if amendments passed at Stage 2 of the Scottish Government’s Non-Domestic Rates (Scotland) Bill become law, says the Federation of Small Businesses.
Speaking to welovestornoway.com local MSP Alasdair Allan pointed out that this came about because the SNP is a minority government and the other parties had combined to force the changes through. The Government's own policy was to maintain the uniform business rate with the 100% discount.
Public Finance Minister Kate Forbes MSP earlier replied to a letter from the Scottish business community highlighting the Scottish Government’s support for maintaining the Uniform Business Rate. She said:
"Thank you for your joint letter of 15 January 2020 regarding your concerns over the recent amendments to the Non-Domestic Rates (Scotland) Bill which seek to scrap the Uniform Business Rate and abolish Scottish Ministers’ ability to set national reliefs.
"The Non-Domestic Rates (Scotland) Bill was introduced to support growth, improve the administration of the system and increases fairness as envisaged by the Barclay Review of Non-Domestic Rates.
"It is clear from the strength of feeling of Scottish businesses as expressed in your letter that the Bill, as amended by the Conservative, Labour and the Green Parties, does not currently do so.
"I am writing to confirm the Scottish Government’s unequivocal support for the Uniform Business Rate. The Scottish Government shares your collective view that the amendment supported by Opposition MSPs at Stage 2 introduces complexity, risks and potential unpredictability into the rates system. Non-domestic rates play an integrated role in the current wider local government finance arrangements by providing certainty and protection to local government funding whilst also ensuring certainty for ratepayers across Scotland.
"I have previously written to the Local Government and Communities Committee after the Conservative, Labour and Green MSPs united to support Andy Wightman’s amendment.
"In a few short weeks, all MSPs will have an opportunity at Stage 3 of the Bill to respond directly and immediately to the concerns of Scottish business.
"For the Scottish Government’s part, I can reassure you all that we will not be supporting any amendments that continue to threaten the Uniform Business Rate, jeopardise the Scottish Government’s ability to set reliefs in subordinate legislation or undermine Local Government funding mechanisms."
The Federation of Small Businesses says Scotland’s rates system is old fashioned, opaque and difficult to understand, and the FSB therefore welcomed the new Bill, believing that vitally important national reliefs like the Small Business Bonus (SBBS) would be preserved.
The SBBS, a relief won for smaller businesses by FSB Scotland, ensures that our smallest businesses pay few or no commercial rates. The savings are reinvested in businesses and used to mitigate rising overheads such as utility bills.
In opening October’s Stage 1 debate, Kate Forbes said that, “The Government is committed to using the limited economic powers at our disposal to create a tax environment that supports economic opportunity”.
Sadly, says the FSB, that ambition was dealt a near-fatal blow at Stage 2 in December, when an amendment was passed empowering Scotland’s 32 local authorities to set their own business rates.
"The result? The ending of national reliefs, including the SBBS. What will replace the SBBS locally? Nobody knows. What we do know is that it could spell very bad news for local businesses, economies and communities.
"One recent FSB survey found that one in five small firms would close if the SBBS was abolished, and similar numbers would cancel investments and amend their growth plans.
"Another FSB survey, conducted this Christmas, found that three-quarters of Scottish firms believe that giving councils additional powers over non-domestic rates would be bad for business, 80 per cent opposing the abolition of national rates reliefs like the SBBS, and 84 per cent not wanting overall control to pass to councils."
Stage 3 of the Bill’s passage will take place on February 19th and FSB Scotland is campaigning hard to convince MSPs to remove the damaging amendments made at Stage 2.
"If you are worried about your business, join our campaign and write to your MSP now," says the FSB.
(This article has been updated overnight to include local MSP and Scottish Government comments)