Scottish businesses face rates rises worth £849 million over the next three years, according to a new academic study.
The figures are contained in the budget proposals published earlier this week by Finance Secretary John Swinney.
Glasgow-based economic think tank the Centre for Public Policy in the Regions warns that huge contributions from business are being used to soften the blow of cuts in Scotland.
Its report says: “While council tax is being frozen, business rates are rising at a rate well above inflation.”
It says cash support for councils is “becoming even more dependent on revenues from businesses through above inflation non-domestic rates (NDR) increases.
“If businesses thought they might be sharing in the Scottish Government’s desire to cap tax pressures on consumers by maintaining a council tax freeze, they were sadly mistaken.”
Using figures from Mr Swinney’s draft budget, the CPPR says direct funding for councils is facing cuts worth £440 million in 2015. But business rates are set to rise £490 million by the same time. It adds up to extra business taxes of £849 million spread over three years.
The report says: “This increase in NDR comes about due to very high rates of increase over the next three years, of 4.2%, 7.6% and 9.4%.”
Part of the rise comes from John Swinney’s planned new “Tesco Tax” (link) where large-scale supermarkets selling both cigarettes and tobacco will face a rates hike worth £30 million next year.’Smoke and mirrors’Reacting to the figures, Tory finance spokesman Gavin Brown said: “John Swinney played a game of smoke and mirrors on Wednesday, and he is being caught out just 24 hours later.
“This is not a budget for the economy. We need clarity from the SNP.”
Garry Clark, head of policy and public affairs at the Scottish Chambers of Commerce, said: “This is the last thing we need.”
He added: “Business rates are one of the few taxes which the Scottish Government has at its disposal. It’s very unfortunate that, once again, it has chosen to increase rates for very many businesses, and it’s certainly not the message we are looking for.
“If money is taken away from business and out of the economy, then that’s not a good thing for Scotland. It’s not what we need when we’re trying to create employment in the private sector.”
A Scottish Government spokesman disputed the analysis, saying: “The way some are interpreting this report is inaccurate – the £849 million figure being suggested in relation to non-domestic income is completely wrong because of double and treble counting, and should be £493 million in terms of a cumulative figure.”
Photo by Flickr user alancleaver_2000.