Warning of store closures as firms face tax bills hike
HIGH street stores could be forced to close because their property tax bills are set to rocket next year, Scottish business leaders have warned.
The Scottish Retail Consortium (SRC) said some members will be hit by rises of more than 30 per cent.
The hike will happen because of the first review of property values since 2010, which will force up the business rates bills for many firms, including supermarkets, high street stores and hotels.
In his draft Budget, unveiled earlier this month, Finance Secretary Derek Mackay rejected calls to provide ‘transitional rates relief’ to help firms cope.
Businesses in Edinburgh and Aberdeen are expected to be hit hardest by increases as a result of the revaluation.
In a submission to the inquiry into Mr Mackay’s draft Budget by Holyrood’s economy committee, the SRC said: ‘We are already hearing early indications and growing alarm from some members that, as a result of the draft valuations which have just been published, their total rates bills could leap by over 30 per cent for those premises operating in and around Edinburgh.’
The SRC described the business rates system as ‘opaque’ and unwieldy, saying: ‘Whilst we recognise the Finance Secretary is somewhat limited by the available levers on business taxation, this continued complexity will only deepen unless fundamental reform of the rates system occurs.’ It was also heavily critical of the Scottish Government for failing to end the controversial large business supplement, which is currently paid by any company based in premises with a rateable value of more than £35,000.
While Mr Mackay announced the rateable value for paying the supplement would rise to £51,000 from April, he refused to scrap it entirely. He will also go ahead with doubling the supplement, from 1.3p in the pound to 2.6p, in April.
In its submission, the SRC also warned any decision to raise income tax by 1 per cent would take £475million out of the pockets of its customers – equivalent to a 2 per cent decline in total retail sales.
The SRC said: ‘As public policy continues to drive up labour and property costs, retailers are looking ever more closely at shifting their investment towards their online presence, especially given falling technology costs and greater digital capability.’
Scottish Tory economy spokesman Dean Lockhart said: ‘This is a stark warning from the SRC on the damage the SNP is doing to our economy. The SNP’s decision to hike business rates has punished hardworking businesses that are the lifeblood of our economy.’
The retail industry is Scotland’s largest employer, with 252,000 members of staff. But the number of jobs in the sector has slumped by 10,000 in the last seven years, while the number of shops fell by 1,700.
A Scottish Government spokesman said: ‘The Scottish Government announced a package of action to reduce business rates as part of the Budget.
‘The small business bonus scheme will be expanded from 2017 to lift 100,000 properties out of rates completely, 8,000 business properties will no longer pay the large business supplement and the overall business rates poundage – the core tax rate that applies to the rateable value of business properties – will be cut by 3.7 per cent to 46.6p.’
Comment – Page 16
‘Damage to the economy’