Scottish Businesses Paying the Price
for Inflationary Coincidence

Tuesday 17th January 2012

The falling inflation rate is adding further weight to the case to mitigate the planned rise in Scotland’s business rates bills this April.  Following today’s news that CPI inflation had fallen to 4.2% and RPI inflation had fallen to 4.8% in December, Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:

“The Scottish Government is planning to increase business rates for firms across Scotland by 5.6% in April – a figure based on last September’s inflation rate.  It is now clear that by the time this business rates increase is implemented, real inflation will be at a much lower rate and the Scottish Government will be taking much more money from businesses as a result.

“According to the Scottish Government’s own figures published after the Draft Budget, it was expecting to take an additional £115 million from Scottish businesses this year as a result of inflation.  RPI inflation at that time was 5.2%, but it was September’s RPI rate of 5.6% that was ultimately applied, meaning that Scottish businesses will actually be paying some £123 million extra this year – £8 million more than the Scottish Government had budgeted for.  However these latest inflation figures suggest that businesses should only be paying an additional £106 million this year, with that figure set to fall further as the months go on.

“With the Scottish Budget still at a draft phase, there is still time for the Scottish Government to apply a fair rate of increase in this year’s business rates and minimise the financial burden on Scotland’s hard pressed businesses.”

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