World Economy
0

Scottish Business Rates Under Fire

Scottish Business Rates Under FireScottish Business Rates Under Fire

Scotland’s business rates system, which charges non-domestic properties to contribute towards the costs of local services, is placing a higher burden on smaller firms.

Scotland’s business rates system has come under fire following a new research report from Holyrood. The investigation, published by the Scottish Parliament Information Center, concluded that non-domestic rates were significantly higher in the hospitality industries than in any other sectors of the business economy between 2011 and 2014, digit.fyi reported.

The findings come ahead of a review of the business rates system due to be published by the Scottish government later this week.

Earlier this year, a number of companies including Sainsbury’s warned of high street closures after they were told that British-wide rates could force businesses to hike prices as much as 400%. A report earlier this year found that some shops have already faced a rise of 8.75% in rates over the last seven years.

NDR is taken from businesses based on their rateable value (calculated from size and location, for example)–there is no connection between a business’ profitability and how much it pays.

As a result, the report finds that in Scotland the construction industry only paid around 1.4% of its operating surplus to NDR, while the hospitality sectors paid 11.6%, in 2014. Shops, which account for the same share of GVA (total contribution to the economy) as manufacturing, but pay rates of 30.8%, in comparison to 11.1%.

“There is a significant variation of rates as a share of operating surplus across different sectors”, the report claims. “Non-domestic rates as a share of operating surplus is significantly higher in the accommodation and food services sector than any other sector of the economy, particularly construction and manufacturing.”

 

 

Add new comment

Read our comment policy before posting your viewpoints

Financialtribune.com