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FALLING INFLATION UNDERLINES THE NEED TO REASSESS BUSINESS RATES INCREASE

[ 15-11-2011 ]

Today’s news that both CPI and RPI inflation have fallen back has been welcomed by Scottish Chambers of Commerce but it underlines the need for urgent action by the UK Government to apply a lower increase to next year’s business rates poundage than last month’s peak inflation of 5.6%.  Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said: 
 
“It is welcome news that both the CPI and RPI rates of inflation have fallen and it now looks likely that the Bank of England may be correct in their analysis that September’s inflation figures may have been the peak.  With inflation set to fall further next year as January’s VAT rise drops out of the calculations, it now becomes imperative that the UK Government diverges from its usual policy of increasing the business rates multiplier by the September rate of RPI, which now looks certain to be an historic peak figure, and instead applies a lower increase to hard pressed businesses next year.
 
“Although business rates are devolved to the Scottish Parliament, it has been established practice since 2007 for the Scottish Government to match the English business rates poundage and it would therefore benefit businesses across the Scotland and England if the UK Government was to take the lead on this issue.
 
“We have written to the Chancellor of the Exchequer asking him to think again about this added burden to business.  At a time when businesses are facing rising cost pressures from a number of sources, a business rates increase of 5.6% - based on a coincidental 20 year peak in RPI inflation – cannot be justified.”

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