A move to reform business rates in England could put Scotland at a competitive disadvantage, a trade body has warned.
Chief Secretary to the Treasury Danny Alexander yesterday announced a review of business rates in England that is set to report by Budget 2016.
David Martin, Scottish Retail Consortium Head of Policy & External Affairs, argued that the Scottish Government – which governs the business property tax north of the border – needed to follow suit.
He said: “The current system of business rates is not fit for purpose and acts as a drag on Scottish economic growth. It acts as a disincentive to invest and unlike any other national tax it fails to flex with economic circumstances. 69% of MSPs agree that current system is in need of reform.
“Today’s announcement, whilst good news for ratepayers in England, does not apply to Scotland. This should concentrate minds in the Scottish Government, as it is no longer an option to say that fundamental reform is too difficult or complicated – that particular ship has sailed.
“Scotland can choose to stand still but, with the promise of reform elsewhere in the UK, risks leaving businesses in Scotland at a competitive disadvantage.”
But the government’s initiative yesterday was criticised by Labour as a “re-announced review”.
It comes after the Coalition pledged in December to conduct a review of business rates and implement a £1billion package to reduce the cost under the current system in 2015/16, designed to shore up small firms and the high street.
Helen Dickinson, director general of the British Retail Consortium, welcomed the plans to shake up the current system.
“This is, after all, a system that acts as a major drag on our economy while punishing our local high street,” she said.
Neil Stockham, tax partner at business advisory and accountancy firm BDO, said the move was “welcome but long overdue”.
He said: “There is likely to be a long period of review and consultation such that any benefits of change are unlikely to filter through until well into the next parliament.”