Reform Scotland


Reform Scotland calls for Scottish Government to devolve business rates to councils

Reform Scotland, the independent, non-party think tank, is calling for control of Non-Domestic Rates, also known as business rates, to be devolved in full to local authorities in a move it says would embrace the “spirit of devolution”.

In response to a consultation by the Scottish Government on the implementation of the Barclay review, the think tank argues the Scottish Government should extend the principle of devolution from Westminster to Holyrood to the relationship between Holyrood and local authorities.

Non-Domestic Rates are collected by councils, but are set and controlled centrally by Holyrood.

The Scottish Government’s consultation document suggests that for the sake of efficiency, for convenience for larger rate-payers, and to ensure differing rates don’t affect investment decisions, consistency of rates and administration across Scotland makes sense. However, if that argument is followed to its logical conclusion it is also an argument against devolving any taxes from Westminster.  

Commenting, Reform Scotland Director Chris Deerin said:

“The Scottish Government, as one would expect, favours maximum devolution of fiscal powers from Westminster to Holyrood. It is, therefore, reasonable to examine its commitment to devolution from Holyrood to local authorities.

“The fact is that devolved Scotland is a highly centralised state. Our councils currently have no real fiscal powers. Business rates are controlled by Holyrood and although the Council Tax freeze has been lifted, increases are capped by Holyrood, just as they once were by Margaret Thatcher’s Westminster government. This makes it exceptionally difficult for local authorities to use taxation as a tool to react or adapt to local circumstances.

“It is now time for the Scottish Government to embrace the spirit of devolution by applying the same principle to its own relationship with local government.

“There are diverse regional economies across Scotland, where the effects of unemployment, ageing populations and business creation and investment differ.  A one-size-fits-all approach didn’t work from Westminster, and it also doesn’t work from Holyrood. Our local authorities must have greater local fiscal responsibility.

“Business rates should be devolved to local authorities in full – they should set the rate, the discounts, and how and where the tax is applied.

“They will then be empowered to use the tax as a tool to drive business investment, should they wish to do so, and to optimise their tax take.”