Deputy First Minister John Swinney has been urged to “hold his nerve” and “resist the temptation” to add to costs for north-east businesses in the Scottish draft budget next month.
Aberdeen and Grampian Chamber of Commerce (AGCC) policy adviser Fergus Mutch has warned Mr Swinney faces the “justified fury” of businesses if he adjusts business rates in such a way to make them pay more than they do at now as new tax mechanisms are published.
Many businesses across the north-east are expected to see an easing in prices with the draft non-domestic rates valuation roll set for publication today (Nov 30).
But Mr Swinney, who is in charge of the country’s finances while Finance Secretary Kate Forbes is on maternity leave, must not hike poundage rates in an effort to restore public finances “on the backs of Scottish businesses”, he added.
Aberdeen ‘clobbered’ by unfair rates
Many along with the chamber have argued north-east companies have unfairly born the brunt of business rate costs relative to other areas in Scotland in recent years.
Business rate bills are calculated by multiplying individual Rateable Values (RV) by a nationally-set “poundage” – with reliefs and exemptions applied.
AGCC said the last revaluation took a snapshot “tone date” of April 2015 which reflected inflated prices reflecting boom years, just as the region faced the effects of the oil price crash.
This resulted in rateable values of offices and other commercial property such as hotels facing significant increases in rates bills that were out of step with the region’s faltering economy.
AGCC said that the north-east paid for £157 million of the £346m uplift in rateable values nationwide since this came into effect, an “eye-watering” 45% from an area accounting for under 10% of Scotland’s population.
Pain of north-east businesses not forgotten
Speaking ahead of the publication of the latest valuation roll, Mr Mutch said Mr Swinney must help businesses grow to help the economy avoid the ravages of recession.
He said: “If the trend in revaluations is down, the Scottish Government should resist the temptation to hike overall poundage rates up — cancelling out in one broad stroke any benefit to business.
“Aberdeen had been clobbered by an unfair rates regime over the past five years. We hope today is the start of that balance being reset.
“We hope to see John Swinney hold his nerve if he wants to boost growth.
“Taking the strain off businesses to flourish and grow is the only strategy that can prevail in lifting the Scottish economy out of the doldrums of an effective recession heading our way.”
Businesses in ‘critical but precarious’ time
AGGC is worried that any downward revision in values will be used to justify a wholesale uprating of poundage rates, leading to businesses paying the same, or even more, than they do at present.
He said: “Any move to balance the books on the backs of Scottish businesses, at a critical but precarious time for our region, would unleash legitimate fury from rates payers at a time when we need to see responsible, pro-growth stewardship of the economy.
The pain that north-east businesses went through during the last round of rates revaluations has not been forgotten.”
“The pain that north-east businesses went through during the last round of rates revaluations has not been forgotten.
“Indeed for some, it made it impossible to continue trading over an intensely difficult economic period for our region.”
Business optimism tempered
He acknowledged that businesses were feeling more “optimistic” across the region but still faced significant challenges following the pandemic and facing soaring higher costs.
“Everyone knows that while the mood is optimistic across Aberdeen and Grampian and within our key industries, we are in a very different world today compared to Aberdeen pre-2015 — with the experience of an oil downturn and pandemic restrictions under our belts, and now soaring inflation to contend with,” he said.
“Commercial premises in city and shire are, in almost every case, much harder to lease on the open market and therefore we expect today’s draft revaluations to fully reflect this trend.”
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