Commercial property taxes in the UK are the highest in the OECD. Retailers want to see fundamental reform of Scotland’s £2.8 billion annual business rates system in order to support investment, business growth and help revive our high streets – where one out of every 10 premises is vacant.
The SRC was at the vanguard of those calling for an independent review of business rates, and we are pleased to see Scottish Ministers taking forward a number of welcome steps emanating from the Barclay Rates Review to modernise the creaking rates system - especially the plans for more frequent revaluations and reducing by half the time between valuations and them coming into force.
The commitment given by the Finance Secretary in September 2017 to bring the Large Business Rates Supplement back into parity with the rest of the UK is most welcome, albeit the timetable is far less ambitious than that advocated by Barclay. 5,077 retail premises – and 21,000 commercial premises in general in Scotland - continue to pay higher rates than their counterparts or competitors down south.
The overall rates burden remains onerous, at a time when retailers are grappling with profound changes in shopping habits and other growing costs including the apprenticeship levy and higher statutory employer’ pension contributions. Given that context the Finance Secretary’s decision to limit 2018’s rise in the business rates poundage to CPI, rather than RPI, is a positive step that will shave £5 million off the rates bills of retailers this year.
Challenges however remain. Rates bills remain onerous and promised reforms need to be accelerated. Plans to investigate new business rates levies on out-of-town retailers and on retail warehouses are concerning - it is far from clear why firms operating in Scotland should pay more in rates than firms in comparable premises elsewhere in the UK, particularly when many have options over investment elsewhere in the UK or indeed abroad.
Progress is being made however there is still plenty to do to recast business rates for the decades ahead and deliver a system which is modern, sustainable and competitive.