Business rate talks take place
Earlier this year businesses across Edinburgh received notification of the business rates that they are due to pay in the year ahead.
This year’s business rate hikes come after a revaluation exercise and many businesses across the city are deeply concerned by the changes that have resulted.
Business rates are calculated using what is known as a rateable value which is calculated once every five years. This is a figure which effectively values a property by the amount of rent it could demand on the open market. This rateable value is then multiplied by a constant figure, known as the poundage, which gives the total that a business has to pay in the year ahead.
Businesses in Edinburgh are concerned because the latest revaluation of rateable values was made two years ago, before the financial crisis hit the markets. They argue that this means rateable values are artificially high compared to today’s values - meaning higher business rates.
There is also concern that the rates rises are coming in all at once rather than gradually as in England where transitional relief has been put in place.
What this means for businesses in Edinburgh is best illustrated with examples. In the hotel sector for example, the average rate bill has escalated by around 20%. In a time when people have less money for holidays this sort of rise is difficult to absorb.
Many small businesses in the city also stand to lose out. I know of some businesses which last year qualified for the small business bonus scheme and so were exempt from rates. For some of these businesses the revaluation has taken them above the threshold to be eligible for the scheme and they now have to deal with a double hit.
I recently raised the issue with Finance Minister John Swinney (see video opposite) following reports from the Edinburgh Chamber of Commerce that many of its members intended to appeal their new rates bills. I asked the Minister if he would be prepared to meet with representatives of the Edinburgh Chamber to hear their concerns and I was pleased he accepted.
At that meeting I was disappointed that the Minister refused to reconsider the case for transitional relief however there was some issues on which constructive discussion took place.
Faced with the experiences of the Edinburgh Chamber the Finance Minister asserted his desire to see a supportive appeals process - an assurance that will be welcomed by the many businesses who intend to appeal their rates bill.
Given Edinburgh’s massive contribution to Scottish Government coffers via business rates I welcomed the Minister’s agreement to examine the underlying issue of how the City of Edinburgh can benefit from its own contributions. He has indicated his willingness to look at a wider application of Tax Incremental Financing across the city rather than restricting it to one area. TIF would be a mechanism through which capital projects can be funded against future economic benefits that they will bring.
The Scottish Government needs do more to create conditions that allow and encourage businesses to grow and I will keep a close eye on how the situation develops following these discussions.