Following the recent article on business rates which appeared in the Western Mail and the Daily Post, as well as on this blog, I have been inundated with emails and telephone calls from businesses in Wales who simply cannot believe that we have a worse relief regime here than in either England or Scotland.However, another issue which is related to the large increases faced by many small firms in their rates bills in just over three weeks time is that of transitional rate relief.
If you remember, the Welsh Conservatives proposed as an emergency measure to help with the higher bills faced by 40 per cent of the business population in Wales as a result of the recent revaluation exercise. This system, if enacted, would have enabled any large increases to be phased in over time rather than in one large bill this April.
Of course, critics of applying such a system to Wales have assumed that we would merely adopt the same transitional rate relief system as England for business rates. To be fair, they shouldn't be faulted for such an assumption as WAG has meekly followed England with regard to business rates with on exception - we do not have the same generous level of rate relief as our friends across Offa's Dyke.
Why should that be the case at all? Surely, as I stated in my previous article, the whole point of devolution is the ability for Wales to do things differently.
As the Federation of Small Businesses pointed out recently, rates, along with rents and salaries, are the three biggest expenses faced by small firms.
To introduce higher business rates for 40 per cent of the business community in Wales at a time when these firms are trying to save every penny to ensure their survival is irresponsible and threatens the recovery of the Welsh economy.
That is why the Welsh Conservatives also proposed that, amongst a range of emergency measures to deal with revaluation during a time of recession, Wales should introduce a specific transitional rate relief to alleviate this increase.
So what would be the principles of such a "Made in Wales" intervention?
First of all, the aim of any transitional relief scheme should be to provide stability and certainty and to allow those facing large increases over time to adjust to their new liability.
During a recessionary period or the months immediately after it, transitional relief could support the finances of businesses until the economy recovers from recession. In this case, this could be funded to ensure transitional relief for the next two years.
Unlike England, transitional rate relief should not be self-financed by the imposition of the penalty of downward transition as this is fundamentally unfair. Instead, this should be seen as a recession interventionist policy by Government - a type of temporary tax break - to support the business community through the recession.
This relief should clearly be targeted to ensure that it reaches those in most need. Therefore, unlike England, any transitional rate relief system in Wales would be focused towards small firms only and exclude large businesses i.e. the Tescos and Asdas, as claimed erroneously by Plaid Cymru, would not receive any transitional relief.
It could also be targeted towards key sectors - such as tourism - which have faced far higher increases in the valuation of their properties.
Those are the simple principles of a transitional rate relief scheme that is made in Wales for Wales. It does not benefit large firms, focuses on those most in need, and is a temporary measure to deal with the recession.
How would it have been paid for?
The funds would come by considering this as an emergency measure such to support Welsh businesses such as Pro-Act, where nearly £50 million has been committed by Ministers. However, unlike ProAct - where two thirds of the money has gone to support large firms - this measure would be focused on supporting small businesses across Welsh communities.
Given the millions of pounds currently underspent within WAG's business support programme, there are certainly spare funds in the system although a detailed analysis would have to be made to determine (a) the money available and (b) the threshold at which such transitional relief could apply.
Unfortunately for the small business community in Wales, any such discussion about transitional rate relief is purely academic as, yet again this week, the One-Wales Government categorically ruled out any additional support to alleviate business rates in Wales. Therefore, whatever the potential merits of a Welsh transitional rate relief scheme, it will not be implemented under the current Labour-Plaid administration.
Very few of those 60,000 businesses getting lower bills will thank government as most believe they are getting charged too much in the first place. However, for the 40,000 who will be facing higher bills, the reality of the situation will finally hit home when the bills start landing on their doormats over the next few weeks.
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