CBI warns garden centres risk being 'collateral damage' in SNP plan to make Amazon pay more tax

Garden centres and car dealerships risk becoming "collateral damage" in the SNP's plan to force Amazon to pay more tax, the CBI has warned as it urged urged an out-of-town business levy to be dumped.

Derek Mackay, the Finance Minister, announced proposals for a business rates surcharge last month in an attempt to target online retail giants' warehouses and distribution centres.

CBI Scotland said the Scottish Government was "not alone" in wanting global online companies to pay more tax but argued business rates do not provide "the unilateral solution."

It warned plans for an out-of-town or online surcharge on the levy would hit a wide range of "hard-working" firms like garden centres and supermarkets, as well as business parks and independent companies in rural areas.

With many of those firms already contending with large business supplement costs and apprenticeship levy contributions, it said the proposals "represent a tax too far and should be scrapped with immediate effect."

The Federation of Small Businesses used its submission to predict an out-of-town levy could create "local divisions" and independent companies could be inadvertently caught.

They delivered the warning in response to a Scottish Government consultation on business rates reform, following a review conducted by Ken Barclay, the former chair of RBS's Scotland board.

Mr Mackay has said pilot schemes allowing councils to implement an out-of-town surcharge could be introduced from spring 2020. The proceeds would go towards supporting shops in struggling town centres.

Fife Council has confirmed it is interested in participating in the trial, meaning Amazon's distribution centre in Dunfermline - its largest in the UK - could be affected.

But the Horticultural Trades Association, which represents the garden industry, has warned garden centres could be forced to shut if they are faced with another tax hike.

Tracy Black, the CBI Scotland director, said: "While we’re very sympathetic to the plight of high streets up and down the country, clobbering vital employers with a triple tax whammy is not the solution – instead we need smart, creative and sustainable proposals that revive local communities through increased economic activity. 

"The idea for an out-of-town levy is a non-starter and the proposal should be scrapped immediately.”  

David Lonsdale, director of the Scottish Retail Consortium, said: "This new tax will simply add further complexity and cost to the business rates system, which is already more expensive for medium and larger sized firms operating here compared to their counterparts or competitors down south due to the higher large business rates supplement."

The CBI submission noted that the Barclay review warned using business rates to raise more tax from digital companies "would be inefficient".

The review said “attempting to crowbar a property tax upon some businesses that do not rely on property is not only counter-intuitive, but will also likely lead to significant unintended consequences."

Instead, the CBI highlighted how the EU, the OECD and the UK Government were "attempting to find multilateral and unilateral solutions for how to tax global online business."

The business group said the levy would hit business parks set up in areas "where there have been limited business activity in the past."

Companies in remote locations and the Scottish islands could also be hit, many of which are dependent on online trade.

The CBI argued that farmers could be discouraged from diversifying their businesses as they would likely be caught by the levy.

If the Scottish Goverrnment was determined to proceed, it said safegaurds should be introduced such as a cap on revenues and a requirement to consult affected firms.

The FSB said ministerial approval should be required for each of the schemes and they should not be accepted if they are opposed by local companies.

A Scottish Government spokesman said: "The proceeds from this supplement would be used to support rates relief for businesses in town centres and we are consulting on a range of appropriate safeguards, such as the need for consultation with all rate-payers who might potentially be affected.

“It is important that the consultation is as wide-ranging as possible and we would encourage all those with concerns or comments about the current business rates system to take part.”