MSPs have rejected a Green attempt to devolve power over business rates to Scotland’s local councils.

The SNP, Labour and the Tories all voted against the proposal by MSP Andy Wightman. Only the LibDems backed the plan.

The defeat isn’t hugely surprising, with local authorities, businesses and trade unions all expressing concerns about the change.

Andrew McRae from the Federation of Small Businesses claimed it would have “hit small businesses with new annual rates bills in excess of £7000”.

Wightman disputed those figures and said it would have “righted a fundamental wrong” and handed back powers to town houses that were removed by Margaret Thatcher.

If it had passed, the amendment to the Non-Domestic Rates Bill legislation would have stopped the Uniform Business Rate which is used to calculate non-domestic property tax being set nationally.

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Instead, Scotland’s 32 local authorities would each be responsible.

Wightman said: “Non-Domestic Rates are a local tax and for well over a century they were under full control of the level of government to whom they belonged before being centralised by Margaret Thatcher’s Government.

“This vote today is the first time in the history of devolution to make provision for this historic wrong to be corrected. It’s a vote for democracy and to make Scotland a normal European country by giving local authorities the right to control their own tax base. Or we continue with the centralisation which started with in the Thatcher era and which assumes that the Finance Secretary knows what’s best for local authorities.

“Non-Domestic Rate is a local tax, it belongs to local government and councils. Just as the Scottish Parliament sets Scottish tax rates, so too should local authorities set local tax rates.”

Public Finance Minister Kate Forbes claimed that the amendment would effectively lead to £300bn worth of rate relief being abolished.

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“Some parties may ideologically believe that’s right but to do it in one vote with no scrutiny or thought to what it means is no way to set such a change in motion,” she said.

“Andy Wightman is to be commended for raising the profile of this issue. I know Cosla are keen to see fiscal empowerment and the way in which local authorities are funded will now be part of the fiscal framework taken forward at pace.”

Forbes promised that the Government would look at “integrated local government funding mechanisms and all local government taxes, including looking at implications of devolving Non-Domestic Rates”.

CBI Scotland’s Tracy Black welcomed the defeat, saying Scottish firms would be “relieved to see common sense prevail”.

“As the economy continues to stutter, businesses have long called on politicians to support a simplified rates system that encourages greater investment,” she said.