Under the new Licensing (Scotland) Act 2005, cafés, pubs, clubs, restaurants, hotels and guest houses face substantial hikes in the cost of applying for, and maintaining, a liquor licence - no matter the size of the premises and the quantity of alcoholic drink they sell.

Instead of paying £172 to apply for a new licence, and £86 to renew it every year or every three years, many small licensed businesses in Argyll and Bute now face an application fee of £800 and an annual renewal cost of £220 - with larger premises facing even greater increases.

While licensed premises throughout Scotland all face higher fees under the Act, the Argyll and Bute Licensing Board has opted to charge the maximum fee permitted by the new regulations.

Tim Saul, the chairman of Isle of Bute Marketing and Tourism and owner of the licensed Brechin's Brasserie in Rothesay's Bridgend Street, has written to Argyll and Bute MSP Jim Mather, who is also the Scottish Government's minister for enterprise, energy and tourism, expressing his fears for the future of businesses affected by the Act.

"While the purpose of the increases is apparently to cut down on binge drinking, I would imagine that small cafés' contribution to binge drinking is probably zero," Mr Saul told us.

"The financial burden now faced by small licensed businesses on Bute is considerable.

"In 2005 the Scottish Executive commissioned an extensive study into licensing costs which showed that 63 per cent of licensing boards' costs are covered by the present level of fees - so why an increase of this size?"

One Rothesay hotelier, Margaret Thomson of the Ardyne St Ebba in Mountstuart Road, told us she had even considered giving up her hotel's liquor licence because of the increased fees.

"Giving up our licence was something that had to be considered," Margaret told us, "but we had a good look at the costs and decided it was something we could manage.

"The thinking behind the new laws is great - I have no problem with what the politicians are trying to do - but I feel that the bureaucrats have turned it into an absolute nonsense."

Another hotelier, Andy Gibb at Chandler's in Ascog, told us the charge for renewing his hotel's licence was out of proportion with the area of the building used to serve alcohol.

"The drinking bit of our hotel, if you like, is a very small proportion of the building," he said.

"But the crux of all this is that the fees for your liquor licence are based on the rateable value of your entire building."

Most of Scotland's area licensing boards have opted, like Argyll and Bute, to charge the maximum fee allowed within the Act's framework, though some, including Inverclyde, Renfrewshire and East Ayrshire, charge up to 25 per cent less than the maximum.

In each case, however, the fees are considerably greater than under the previous legislation, the Licensing (Scotland) Act of 1976.

Jim Mather told us: "The plan is to allow local licensing boards to set fees for licences at levels that recoup the cost of processing the licences.

"Current research shows that boards currently only received £2.85m in fees but face £4.5m in costs - however the fees will be capped to stop the system being used as a revenue raiser.

"Clearly, I am keen to hear from anyone who feels this new approach has been harmful, especially given that we have just started the process of removing the business rates charge from 120,000 small businesses: a good proportion of whom are in Argyll and Bute.

"Equally, as a result of listening to Tim Saul and others I will be having a meeting with the cabinet secretaries for both justice and health to ensure that any new moves do not have damaging unintended consequences on small local businesses."

See www.infoscotland.com/licensingact for details of the changes to licensing laws contained in the Licensing (Scotland) Act 2005. Information on liquor licensing in Argyll and Bute, and the new scale of fees, can be found at http://tinyurl.com/32qhlq - this address redirects to the appropriate page on the Argyll and Bute Council website.