THE announcement of a package of support to help businesses deal with the impact of the rates revaluation is a welcome move by the Scottish Government. Over the last few days, The Herald has been reporting on the consequences of the revaluation for many businesses as well as the troubling anomalies in the system. The Scottish Government needed to act and now it has.
The precise details of the scheme have yet to be revealed, but in making the announcement the finance secretary Derek Mackay has said he wants to help businesses in key regions and sectors. He has also pointed out that, next year, seven out of ten business properties will pay the same rates, or less, and says that under the small business bonus scheme, thousands of businesses will pay no rates at all.
Mr Mackay is absolutely right on his figures – many smaller businesses will pay less. Businesses also have to pay their fair share of tax at a time when public services badly need the money and the total income to be raised from non-domestic rates will actually fall by 2017-18. However, we also know that many businesses across the country will face large rises in their rates, with many owners convinced they could be forced out of business altogether, and it is important the Government focuses its package of help on the areas that need it most.
The oil and gas sector is one example. Aberdeen City Council seems likely to introduce a relief scheme to help as much as it can, but the business rates that will come into force in April were calculated in 2015 before much of the decline in the oil and gas sector. In other words, businesses in oil and gas will be issued with boom-time bills in the middle of a slump.
The licensed trade will also need particular help. The sector has been under increasing pressure in recent years, with pubs in particular feeling the strain and yet many are facing large increases in their rates which some owners believe could push them over the edge. They are also victims of a system that calculates their rates based partly on turnover when the rates of other types of commercial property are calculated largely on square footage with turnover excluded.
The hope now is that the Scottish Government has recognised that these sectors need extra help and will include them in its package of support, although the problem of the anomalies in the system will also need to be fixed. It may be that the Barclay Commission on the business rates system will tackle the issue when it reports in the summer, but if the furore over the revaluation has taught us anything it is that the current system is not fit for purpose. It is also a pity that the Government did not wait for the commission’s report before forcing through the revaluation.
In the longer term, the aim must be a rates system that is more efficient and transparent – it also has to attract the support of a range of businesses if it is to be sustainable. The businesses facing large rates rises have been right to raise the issue, and this newspaper will hold the Government to account if its support for businesses proves to be insufficient. But there is at least now hope that, with extra support and a review later this summer, we may yet have a system that is clearer, simpler and fairer.
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