(Image: Newsquest/ Colin Mearns)
Current approaches to business rates and practices in Scotland are “ripe for reconsideration”, a leading academic has declared.
Writing exclusively for The Herald, Leigh Sparks, professor of retail studies at the University of Stirling, argues that the current system has failed to adapt to the “shifting nature of business”. The respected academic says fundamental changes in the economy, including the growth of online retailing, global business structures and out-of-town developments, have transformed the taxation landscape.
Against the changing backdrop, professor Sparks believes the “the non-domestic rates system has become more complex, often because of special pleading or specific schemes, and those paying it subject to ever more hurdles and volatility”.
He argues the system is widely viewed as unfair and complex, creating “cliff edges” and disincentives, for growth and investment.
“The operation of the non-domestic rates system is viewed as inconsistent and is likely inefficient and increasingly ineffective,” professor Sparks writes. “At a time of public sector reform and increasing need for efficiency and effectiveness, business rate approaches and practices are ripe for reconsideration.”
Professor Sparks has offered his perspective as part of The Herald’s Reset The Rates campaign, which calls for major reform to the business rates system in Scotland.
Professor Leigh Sparks (Image: PR handout)
The campaign was launched after the Scottish business community reacted with alarm to the sharp increases in rates bills many faced after the most recent revaluation of non-domestic property in Scotland. Concerns have also been expressed over the complexity of the current regime.
Addressing how he believes the system should be changed, he writes: “We have to ask what is the 21st century purpose of non-domestic rates? If Scottish policy is to promote communities and community wealth building, local organisations, small businesses, growth opportunities and entrepreneurship, particularly in town centres, then non-domestic rates need to align with and deliver this. Too often they seem to be an impediment. The rates system needs simplification and consistency and to provide incentives for local growth rather than barriers to it.”
High streets have been impacted by the growth of online shopping (Image: Newsquest)
Read more:
- 'Stacked against us': Glasgow restaurateur's warning for hospitality
- Sir Tom Hunter backs The Herald's campaign for rates reform
- Luxury jeweller warns Scotland is losing investment to England over rates
- 'What do we get for it? Very little': Argyll hotel owner's rates challenge
Many of professor Sparks’ views reflect concerns that have been raised by The Herald’s Reset the Rates campaign, which is calling for six key reforms:
• Adjust thresholds for the small business bonus scheme to ensure small firms remain within its scope
• Create a national business rates assessor to avoid regional disparities
• Deliver a fairer deal for hospitality and tourism accommodation
• Introduce safeguards to prevent individual businesses facing sudden unaffordable increases following revaluation cycles
• Ensure major online operators pay their fair share to benefit the business community as a whole
• Press the UK Government to restore the business premises renovation allowance relief to help bring vacant sites back into use
Deputy First Minister Jenny Gilruth reiterated this week that she has “committed to a comprehensive review of non-domestic rates”.
The Scottish Government has also commissioned a review into the methodology used to calculate business rates bills for the hospitality sector. It is expected to report around the middle of next year.