Just work in a cupboard, says SNP minister in row over soaring business rates
Businesses can avoid paying high rates by setting up in cupboards, the Deputy First Minister has said.
Kate Forbes said the most profitable firms are 'smaller ones' which can operate from a 'cupboard, where there are no rates'.
Her suggestion came during a Scottish parliament debate on whether the 'current rates regime' prevents companies from 'scaling up'.
Ms Forbes admitted the rates system is 'based on an older version of the economy' which did not apply in 'our new, tech-driven environment'.
Last night Scottish Tory economy spokesman Murdo Fraser said: 'Kate Forbes' view of how businesses work is so detached from reality that she might as well have claimed Narnia is at the back of the cupboard.
'She must know it's nonsense to suggest that manufacturing, hospitality, retail or a host of other businesses could operate in this way.
'And it's downright insulting to downplay the cost of rates, when the SNP withheld relief available elsewhere in the UK, putting Scottish firms at a huge disadvantage.'
At Holyrood, Scottish Tory MSP Liam Kerr asked Ms Forbes: 'Does the Government think that the way in which the current rates regime is structured militates against small businesses scaling up?'
She replied that it did not because of the small business bonus scheme which she said 'remains the most generous across the United Kingdom'.
Ms Forbes, who is also Economy Secretary, said the 'rates system often does not take into account the fact that some of the most profitable businesses are the smaller ones'.
She said: 'A start-up can be launched from a cupboard, where there are no rates, while a large and perhaps less profitable business has to pay them.'
Speaking in the Holyrood debating chamber on Wednesday, Ms Forbes said the rates system is 'based on an older version of the economy, in which the size of properties was linked to profitability, and that is just not the case in our new, tech-driven environment'.
Commenting last night, Glasgow-based businessman Donald MacLeod said: 'This is very disappointing – the SNP appears to have given up on business.
'Businesses in the hospitality sector are falling by the wayside and finding it really tough – and there's no support there.
'For some, a cupboard might be ok – if you were a one-person business – but clearly it doesn't work for nightclubs, bars and restaurants.
'We need to be incentivising and supporting businesses – not telling them to set up a in a cupboard.
'This is mind-boggling stupidity from Kate Forbes - it is utterly absurd.
'Businesses are on their knees - and we have a government which is economically illiterate.'
It came as Ms Forbes criticised about the impact of the SNP's policies after questioning why there is an 'obsession' with income tax rates in Scotland.
Following a keynote speech at economic think tank Adam Smith House, she said: 'In Scotland there seems to be an obsession with income tax as though it's the only tax businesses and individuals have to grapple with.'
Scotland is the only part of Britain not cutting business rates for shops this year.
The Welsh Government announced it will provide 40 per cent relief for all firms in the retail, hospitality and leisure industries.
It came after Chancellor Rachel Reeves announced a 40 per cent relief package for the same sectors in England as part of her Budget.
But the SNP government Budget unveiled in December means retailers in Scotland businesses are receiving less support than those in other parts of Britain this year.
Businesses are also struggling with the UK Government's hike in National Insurance employers' contributions, which began in April.
It emerged in January that companies based in Scotland will pay £55million more tax than those in England because SNP ministers have not delivered on a promise to give them a level playing field.
SNP ministers confirmed that firms based in larger premises in Scotland will pay £54.7million more in business rates than those in England in the year beginning in April.
Shops will pay £9.1million more than those south of the Border, while offices will pay an additional £6.4million and hotels face an extra £2.5million bill.
In its 2021 manifesto, the SNP promised to ensure that 'the largest businesses pay the same combined poundage in Scotland as in England'.
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