Retail Businesses (Taxation)

– in the Scottish Parliament on 3rd December 2020.

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Photo of Mr Mark Ruskell Mr Mark Ruskell Green

1. To ask the Scottish Government what changes to taxation it can make to address the reported widening inequality between small retail businesses and large corporations as a result of Covid-19. (S5O-04817)

Photo of Ben Macpherson Ben Macpherson Scottish National Party

The Scottish Government is restricted by the devolution settlement in what changes to taxation it can make to address any inequality between small retail businesses and large corporations.

We are committed to delivering a taxation environment that is fair and sustainable for all taxpayers. Where we have powers, for example on non-domestic rates, we have decided to prioritise small businesses through the small business bonus scheme, which is more generous than any equivalent scheme elsewhere in the United Kingdom, and is lifting more than 117,000 ratepayers out of paying rates altogether.

The Deputy Presiding Officer:

Before Mr Ruskell asks his supplementary question, we will pause for a moment to ensure that the sound in the chamber is fully operational.

Photo of Mr Mark Ruskell Mr Mark Ruskell Green

Yesterday’s announcement by Tesco that it will voluntarily repay £585 million of rates relief has been warmly welcomed. However, Tesco is only one of several mega-retailers that have benefited during the pandemic. What discussions will take place with other large retailers about similar voluntary measures? Is the Scottish Government able to ring fence those repaid reliefs in order to support smaller high street retailers? What discussions will the Government have with the UK Government on the possibility of an additional windfall tax, through the corporation tax scheme, for companies that have made astronomical profits during the pandemic?

Photo of Ben Macpherson Ben Macpherson Scottish National Party

We welcome yesterday’s announcement by Tesco—as has been noted by the Cabinet Secretary for Finance—and the follow-up news today that other big retailers intend to follow a similar path. Yesterday, the cabinet secretary committed to utilising the resources that are being returned to support businesses in Scotland through mechanisms and means that will be considered in due course.

As Mark Ruskell would expect, the Scottish Government is engaged in discussion with the UK Government on a windfall tax. If the Scottish Government were to have determination of such a tax, it would require permission from the Treasury through the mechanisms of the Scotland Act 2016. Alternatively, the tax could be delivered by the UK Government. We encourage the UK Government to use its powers to make tax decisions and policy in a progressive way, and to continue dialogue on reserved taxes and new taxes, such as a windfall tax.

Photo of Angus MacDonald Angus MacDonald Scottish National Party

As the minister said in his initial reply, the vast majority of powers over taxation remain reserved, which clearly limits what the Scottish Government can do to address any inequalities. Does the minister agree that further powers over taxation should be devolved as soon as possible in order to better enable a Scotland-specific response to Covid?

Photo of Ben Macpherson Ben Macpherson Scottish National Party

Absolutely. The Scottish Government believes that all tax powers should be devolved to the Scottish Parliament so that fiscal decisions that affect the people of Scotland can be made in Scotland. The devolution of tax levers would enable us to tailor measures to fit Scottish needs and circumstances, as we build the path to economic recovery. Having all the powers would also enable us to deliver a comprehensive, progressive and competitive suite of tax policies. The more powers we can bring together coherently, the better.

Photo of Jackie Baillie Jackie Baillie Labour

Tesco yesterday and Morrisons today—who knows who will come tomorrow? I am keen to know what action the Scottish Government will take to actively encourage businesses that have made substantial profits during the pandemic to return their business rates relief. How quickly does the Government think it will receive the money back? How quickly will it ensure that the money goes out the door to businesses that are truly struggling?

Photo of Ben Macpherson Ben Macpherson Scottish National Party

Again, I refer to the cabinet secretary’s public statement yesterday. Updates have come rapidly in the past 24 hours from supermarkets that have engaged on the matter. The Scottish Government continues to engage with large retailers, as appropriate. We encourage businesses that are still considering what to do to consider that the moves by Tesco and other large retailers have been well received among the public, and to consider how good use of public finances can be maximised in these times. It is absolutely right for large retailers to return reliefs in a period in which they have made substantial profits. We continue to liaise with large retailers, as well as with the UK Government, on such matters.