The Courier & Advertiser (Fife Edition)
Business rates
Revaluation shock in store for companies –
Business rates payers may be in for a shock next year. On April 1 2017 rates bills will be subject to the first revaluation since 2010, but the date being used for that valuation is in fact April 1 2015. That matters because a lot has happened since then.
For example, the UK has voted to leave the European Union – a decision which may well have economic consequences.
Global oil prices have remained consistently low since that date, rarely rising above $50 a barrel.
The effect of this on the Scottish economy has been magnified, and the result has been growth in our economy of just 0.6% between the first quarter of 2015 and the same period this year.
This compares to growth across the whole of the United Kingdom of a more healthy 2%.
This means that the basis of next year’s business rates revaluation is a problem because the valuations being used for business rates right through until 2022 will not be based on the economy as it is when the new bills are being paid, but on the economic conditions before the Brexit vote and before the extent of the fall in oil prices became apparent.
The crucial point is that once these valuations are in place, it will be too late to do anything about it.
As things stand right now, businesses will not be able to appeal against the valuation of their premises based on changes in economic circumstances that took place between April 1 2015 and April 1 2017.
All of this is happening at a time when the Scottish Government has made the rates system significantly less competitive than it was, through subjecting more empty properties to high rates bills and doubling the rates supplement that is paid by larger premises.
Our worry is that the combined effects of recent increases in rates bills together with a revaluation that takes no account of the Brexit vote or persistent low oil prices will deal a heavy blow to Scottish businesses at a time when they can least afford it.
This is one area where the Scottish Government has the tools to support business, and we are urging them to do so.
We welcome their commitment to a review of business rates and we are participating fully in this work, but the review is not expected to report until July 2017 – three months after next year’s revaluation.
What is needed now is short-term action to prevent the burden of business rates from becoming unsustainable for many businesses.
As a start, the Scottish Government must enable the 2017 revaluation to take account of the current, rather than the historic, state of the Scottish economy, and it must also reverse its decision to double the large business supplement.
Such actions would demonstrate that the Scottish Government is committed to using the powers at its disposal to help Scottish businesses at this crucial time.