Hospitality bosses have called on the First Minister to step in and freeze the rates revaluation process which threatens to put thousands of firms out of business.
UKHospitality Scotland says the sector is facing a £69m hike in bills next year if the government removes the 40% relief on smaller operators while rateable values rise.
It wants the Scottish Government to pause the revaluation process and work with the sector on an alternative solution, such as freezing rateable values at current levels.
Businesses are facing proposed rises averaging around 120% and, in some cases, 300%. It will also mean many businesses will no longer be entitled to the Small Business Bonus Scheme (SBBS) which is vital to their survival.
Last week the Association of Scotland’s Self Caterers (ASSC), Scottish Tourism Alliance (STA), Scottish Land and Estates, Federation of Small Businesses, and Scottish Agritourism wrote to Public Finance Minister Ivan McKee demanding intervention.
New analysis reveals that a small, rural pub will see its valuation soar 160% from £9,474 to £24,700. This will take the pub out of the SBBS.
One restaurant in Edinburgh’s city centre last week received a rateable value increase of 54% and announced its closure with immediate effect.
UKHospitality is also calling for a permanently reduced business rates poundage for hospitality and leisure at a rate of 30 pence in the pound – funded by rebalancing the burden to reflect the rise of the online economy.
Leon Thompson, executive director of UKHospitality Scotland, said: “Hospitality businesses across Scotland continue to be punished by the broken business rates system.
“This 23% average increase to rateable values will push up hospitality’s business rates bill by as much as £69 million. That’s simply not sustainable.
“There are businesses that have received their draft valuations and are seeing increases of 160% and higher. They’re working out what this will mean for their bills and are coming to the clear realisation that the scale of increases will be unaffordable.
“Without action, we will only see business closures accelerate, more jobs lost and Scottish communities continue to see the loss of much-loved local venues.
“The Scottish Government can solve this problem. With these valuations only being draft, the First Minister and the Cabinet Secretary for Finance can step in and make clear that they will not allow hard-pressed Scottish hospitality businesses to be hit with this level of unjust rates hike.
“I urge them to pause the revaluation process and work with UKHospitality Scotland on an alternative solution, which spares our sector being hit by eye-watering increases to rates bills.”
Mr Swinney last week said he shared concerns over soaring rates revaluations and said that they were being addressed.
He was responding to Conservative MSP Murdo Fraser, who raised the issue during First Minister’s Questions.
Mr Swinney said: “I assure Mr Fraser that the issue is already being addressed by the Government. It is an important issue, because it will affect the sustainability of many businesses as a consequence of the proposed changes. The matter is being pursued by ministers at this time.”
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