Leader comment: Raising business taxes as economy falters is foolish

The Scottish Government is making life harder for businesses at the same time as trying to encourage economic growth.
The Scottish Government is making life harder for businesses at the same time as trying to encourage economic growth.
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Business leaders have warned the Scottish Government that increasing business rates at a time when the Scottish economy is growing far slower than that of the UK as a whole is “highly dangerous”.

They are right.

Plans to revamp the rateable values of businesses have left some small companies – mainly those running guest houses, bars and hotels – facing tax bills that are nearly three times their previous level. This has happened because properties have been re-evaluated for their rateable value.

Meanwhile, around 100,000 properties will be exempt from paying any business rates, under the small business bonus scheme, which is welcome. However, it only applies to those who have a combined rateable value of less than £35,000.

However, for many – particularly those whose companies are based in the Aberdeen area – the picture has changed significantly since the values were reassessed in April 2015. Since then, the oil price has plummeted and as a result, demand for services such as hotel rooms in that area has slumped.

The time lapse has also hit pubs hard as their rateable values are based on turnover, which, for many landlords, has continued a downwards spiral in recent years as they deal with the impact of the smoking ban, new drink-driving curbs and duty hikes which are driving away customers who can no longer afford the prohibitive costs of drinking in city centres. As we go into Brexit, we are inevitably facing economic turmoil. There is no point in stimulating businesses while at the same time charging them more to operate.

The argument that business rates are taxes which go to local council coffers – not the Scottish Government’s – is irrelevant when speaking to a business owner who is facing huge increases in costs. The increase could mean the difference between being able to retain a member of staff or not. Or keeping the business in the black, or not.

Representatives of organisations including the Scottish Retail Consortium and the Scottish Chambers of Commerce have urged politicians to support business, rather than make things more difficult for them.

And the politicians need to listen. There are turbulent times ahead and with the number of Scots in work having fallen by 14,000 over the most recent three-month period and 29,000 over the year, we cannot afford to take chances.

Small businesses are already worried. The Federation of Small Businesses has found that 55 per cent of its members feel that the domestic economic situation is the main barrier blocking their growth, while confidence levels have plummeted.

There are a lot of things that we Scots can do little about. As a nation, we did not vote for Brexit, but we have it – along with all of the turmoil and economic strife that will inevitably come with it.

This, however, is something that we have the power to control and our politicians should make sure that they do so.