The scheme gives companies the flexibility to defer the uplift in their 2012-13 business rates bills over three years.
The deferred amount is equal to 3.2 per cent of the 2012-13 bill, which will be repaid half in 2013-14 and half in 2014-15.
Speaking to the Dundee and Angus Chamber of Commerce ‘Place in the Modern World’ conference today, Enterprise Minister Fergus Ewing said:
“This Government is committed to promoting prosperity in Scotland and much of this depends on the performance of our businesses – both large and small.
“We are investing in a supportive business environment to ensure that Scotland remains the most competitive place to do business in the UK.
“This year’s Scottish budget maintains that commitment and thanks to our system of reliefs 57 per cent of Scottish business properties currently pay zero or reduced business rates bills.
“The normal annual inflationary changes in the pence in the pound tax rate or poundage, are a consequence of setting the same rate as that in England. I want businesses to have flexibility in the way that they address this and our scheme will allow them to do that.
“Every single business that pays rates in Scotland qualifies for this scheme and we would encourage businesses to access information on the scheme from their local authority.”
The British Property Federation (BPF) has joined retailers in urging Government to change the method of calculating commercial property tax, as September’s 5.6 per cent RPI announced hits retailers with an April tax increase they can ill afford.
Under the current system, September’s RPI is used to calculate the annual increase in commercial property taxes introduced next April. Today’s RPI figure of 5.6 per cent, the highest monthly rate since 1991, means an additional £350 million siphoned from the high street into Government coffers, according to research published today by the British Retail Consortium.
In its response to Mary Portas’s Government commissioned review of the High Street the BPF pointed out the compounding effect of linking business rates to RPI meant they had doubled over the past two decades, and if government wanted to provide certainty for retailers a better system would be to have a fixed uplift, of say two per cent – the UK inflation target.
If that was too expensive in the current climate, the Government should at least be using the rate of 5.2 per cent, which was what it had budgeted its own sums on in the Budget.
Ian Fletcher, director of policy at the British Property Federation, said: “This is bad news for retailers, landlords and the economy and comes at a time when many High Streets are fighting for their survival. At the very least the Government should not be making a windfall from business rates. It budgeted its sums on the basis of 5.2 per cent this year and should be giving the difference back.
“When finances allow the Government should also be considering two further reforms. The first to reinstate empty property relief – empty rates are an unjust tax on people deriving no income and who will be paying even more out now as a result of today’s inflation figure. Secondly, linking business rates to RPI has meant they have doubled over the last 20 years and Government should provide greater certainty for businesses by fixing the business rate uplift each year, which we have suggested should be at the rate of the inflation target, currently 2 per cent.”
The FSB argues that it is also imperative that the funding local councils receive from central government is safeguarded so that all parts of the country can benefit from the new system.
The FSB is supportive of moves to create a system which incentivises councils to prioritise business growth, through being able to keep more of the business rates from firms in the region. If approached correctly this system would help to create better and stronger relationships between councils and local businesses, particularly if local authorities recognise that they will only succeed in stimulating growth with the help of businesses.
However, any changes must encourage councils to stimulate growth in a way which is sustainable; making small business growth the bedrock of the local economy, not just as a way to quickly raise revenues.
John Walker, national chairman, Federation of Small Businesses, said:
“Many businesses think that the rates they pay go straight to their local authority when in fact they go into a central pot and are then redistributed. While this consultation aims to make the process fairer and more transparent – in that a local authority will be able to keep more of the rates it collects – it must not be allowed to be used as a revenue raising exercise for councils at the expense of business. It is therefore imperative that business rates continue to be set centrally. ”Central government must also ensure that different types of relief – such as Small Business Rate Relief – remain fully funded, so that there is still a strong incentive to promote them locally. Councils that increase the number of small businesses in their area and improve the take up of relief must not end up worse off as a result.”