A CONTROVERSIAL tax hike on High Street premises lying empty has been branded a “tax on distress” by business leaders after the measure was passed by MSPs at Holyrood yesterday.
The move is aimed at getting vacant shops and other commercial properties back into use, but the SNP government has been accused of a “lack of understanding” of the situation facing recession-hit Scottish firms.
Companies had been entitled to a 50 per cent discount on business rates for empty premises, but they will now be liable for 90 per cent of this charge after the legislation passed at Holyrood yesterday.
As well as the changes to business rates relief, the Bill will also give local authorities the power to increase the council tax on homes that have been empty for a year or more by up to 100 per cent. The Scottish Empty Homes Partnership has estimated that about 23,000 houses in the private sector are lying empty.
Ministers say that the changes to rates relief will rejuvenate High Streets and could encourage more business start-ups.
Local government minister Derek Mackay said: “Our proposals will help breathe new life into Scotland’s high streets by not only encouraging landlords to let out unoccupied commercial properties but by also offering a 50 per cent rates discount to those who take on a disused shop or office that has been empty for more than a year.”
But CBI Scotland, the Scottish Chambers of Commerce, Scottish Retail Consortium and the Scottish Property Federation say the new law will damage firms.
Liz Cameron, chief executive of the Scottish Chambers of Commerce said: “The Scottish Government is demonstrating, at best, a total lack of understanding of the pressures facing businesses in Scotland today.”
Ms Cameron said landlords are doing all they can to let empty properties, and any vacancies were down to the “prevailing economic conditions”.
Businesses say the measure will cost firms £18 million a year at a time when the rates burden in Scotland is expected to rise from £2.18 billion in 2011-12 to £2.66 billion in 2014-15 – an increase of 22 per cent.
David Lonsdale, assistant director with CBI Scotland added: “It is a tax on distress and is wholly at odds with Scottish Government promises to promote economic growth.”
He called on finance secretary John Swinney to rule out further rates rises.
The Tories have estimated that the change will cost the public sector at least £3 million in additional rates, saying health boards, councils, universities and police forces could have to pay more.
Labour’s Sarah Boyack said similar tax rises have caused problems in England, which have been ignored by the Scottish Government.
But the measures were backed by the Greens who say they will give hope to small firms, which “underpin local economies”.