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Will business rates harm Scottish international relations?

On 6th April 2017, business rates will change for the first time in nearly a decade. Jerry Schurder of property consultants Gerald Eve warned that businesses in London will have to pay an estimated £7 billion more per year after the business rates revaluation. However, other research suggests that the biggest impact may be a lot further north.

The Scottish government is yet to announce the details of their own 2017 business rates revaluation, but draft figures obtained by the Daily Express suggest businesses will have to pay much more than they currently do. Worse still, because of Donald Trump’s involvement with an Aberdeenshire golf course and the increasingly difficult Brexit process, the country’s relationships with its international allies may be hanging in the balance.

So what will be the overall impact of the new rateable values on the country, and how could it change affect their international relations?

What will the rates revaluation mean for Scottish businesses?

As mentioned, the official figures for this year’s revaluation are as yet unreleased, and they are expected to be released later in February. But many in the world of Scottish business are already apprehensive. Writing in the Scottish Herald, Liz Cameron of the Scottish Chamber of Commerce has warned that the rating revaluation is “threatening many businesses with significant increases in their rates bills”. She says the affect this will have is just as impactful as Brexit.

An early draft of the actual figures obtained by The Daily Express doesn’t offer much reassurance to commercial property owners. If these figures prove accurate, the Balmoral Estates shop is set for a 100% rates increase, Gleneagles Hotel and Crieff Hydro are due 54% increases, and the Balmoral Hotel will see a 31% increase, pushing them past the £1,000,000 mark for the first time.

These changes seem to disproportionately affect smaller businesses, as Amazon’s Dunfermline distribution centre will only see a rise of 5%.

Clearly, this revaluation could have a knock-on effect on wider Scottish business, but thanks to the Scottish enterprise of one property tycoon-turned president, it could have an effect on the country’s international standing.

What will the rates revaluation mean for international trade deals?

Theresa May recently met with President Donald Trump to discuss a bilateral trade deal. And as we know, Trump isn’t exactly famous for his love of taxes, and the revaluation means the president will be obliged to fork over £210,414 more per year for his infamous Aberdeenshire and Ayrshire golf resorts.

At the moment, Trump doesn’t seem too upset. In fact, he announced he will expand Trump International Golf Links Scotland now he is president, even as ethics officials warn that he might use the UK trade deal to boost profits from the resort. Will this mean Westminster puts pressure on Scotland to lower its taxes to help get a better deal?

Considering Theresa May’s decision not to pursue single market membership, which has angered Scottish politicians, there is no indication that Scotland’s opinion on new trade deals will be taken into account at all in UK bilateral trade talks, but if Scotland’s business rates system does end up being a burden, it is likely Westminster will rethink Scotland’s regulatory powers. Perhaps it would be better if the country was independent?

What does the rates revaluation mean for Scotland’s independence prospects?

Nicola Sturgeon may have ruled out a second independence referendum in 2017, but she has not taken that option off the table forever. One of the key arguments in favour of Scotland’s independence in the Brexit era is that if Scotland remains a member of the EU, it will be a very attractive base for businesses who want to stay in the single market.

However, as Theresa May mentioned in her long-awaited Brexit speech, she is absolutely ready to turn the country into a tax haven by slashing corporation tax should the rest of the EU refuse to accept the terms of their deal. Finance giant JPMorgan has already expressed a preference for this arrangement.

In this scenario, even if independent Scotland remained in the EU single market, it is possible that big businesses will choose to stay in London for the lower corporation tax rather than make the move to Scotland and face higher taxes and business rates.

If Scotland ended up in this situation, it might find the only way to attract businesses would be to cut taxes themselves thereby abandoning the progressive values the country holds dear.

This was posted in Bdaily's Members' News section by Caitlyn Stevens .