PRIVATE schools, universities and council-operated leisure centres could be forced to pay business rates under proposals made in a long-awaited review into taxes paid on commercial properties.

The Scottish Government was criticised earlier this year after a revaluation of what business properties were worth, the first assessment in seven years, led to some firms facing hefty hikes.

The anger over that revaluation, which impacted on the hospitality sector and disproportionately on the north-east and Aberdeen, led Finance Secretary Derek Mackay to announce a £44 million package of an extra rate reliefs.

READ MORE: Hospitality industry gives mixed reaction to rates review after revaluation hikes

In March, Scottish Ministers commissioned former RBS chairman Ken Barclay to look into how to make rates “fair and balanced”.

In his report, Barclay made 30 recommendations, stopping short of suggesting a complete overhaul of the system. However, some of the report was fairly radical, and the former banker had relief to charities firmly in his sights.

The review says the current system of charity relief has not been overhauled despite the amount of relief paid for by the government increasing significantly.

This is in part due to Scotland’s local authorities creating a multitude of arm’s length external organi- ations. These Aleos are often how councils run leisure facilities.

Private sports clubs should also have their relief reviewed, the report says, with only those that support affordable community-based facilities being able to benefit from the tax breaks, “rather than members’ clubs with significant assets”.

The report also criticises the “unfairness” of private schools benefiting from reduced or zero-rates bills, and says universities, too, should pay rates for their commercial endeavours, such as halls of residence that are rented outside of term time, or coffee shops run on campus.

One proposal welcomed by just about all was the recommendation that nurseries receive 100 per cent relief, to help make Scotland’s workforce “inclusive and diverse”.

Barclay and his panel also recommended rewarding business who improve properties, allowing them to delay a year before they have to pay higher rates because of the work done.

A similar break would be offered for new-build properties to have a tax break of one year, “creating some breathing space for both developers and occupiers and providing a better environment for new ventures to get off the ground”. There should also be an evaluation of the effectiveness of the Government’s Small Business Bonus Scheme, Barclay says.

Speaking at the launch of the report, Barclay said: “Any well- functioning tax needs to rely on principles of fairness. Increasing fairness and transparency will increase credibility from ratepayers.

“Ratepayers providing the same goods or services should not be treated any differently because of their location, or by virtue of them operating in the public or private sector. We have also highlighted unfair advantages gained by anomalies within the system, and of those who deliberately avoid payment of tax. Neither is fair.

“These measures are essential for the rates system to remain credible for ratepayers and to ensure revenues are not undermined by avoidance tactics. We are clear, this is not about penalising certain sectors, it is about compliance, fairness and transparency.”

Mackay said: “This report offers recommendations for reform of the system to make it work better for ratepayers across Scotland, while ensuring that the contribution they make to important local services is maintained.

“Ken and his team were tasked with finding ways to improve the current system, updating it so that it better supports business growth, encourages long-term investment and enables businesses to better navigate fast-changing marketplaces. I know the review group has worked incredibly hard, spending more than a year engaging closely with ratepayers across Scotland before compiling this report. I would like to take this opportunity to thank them for their substantial efforts.

“Having now received the Barclay Review, the Scottish Government will respond swiftly to its recom- mendations.”

Green MSP Patrick Harvie felt it was an opportunity missed. He said “Disappointingly, the report did not propose any of the bold measures that Green MSPs have been campaigning for, such as real reforms to non- domestic business rates that would see them transformed into a land value tax aimed at removing any disincentive to improving properties, or devolving 50 per cent of the rate-setting to councils.”

Scottish Labour’s economy spokeswoman, Jackie Baillie, said some of Barclays’ recommendations were to be welcomed but questioned making Aleos pay tax.

Baillie said: “[Recommendations] that certain public buildings, such as leisure centres which are operated at arms’ length by local authorities, should pay business rates … is another burden on public services already dealing with budget cuts made by the SNP Government.”

Tory MSP Murdo Fraser gave the review a guarded welcome, saying: “There are many welcome proposals within this report. But many firms will feel this is tinkering round the edges of a broken system, rather than the fundamental overhaul that’s required.”