TY - JOUR

T1 - A review of the current business rates scheme in Wales and the effects of a potential local retention

AU - Kapitsinis, Nikos

N1 - Funding Information: Almost three quarters of the local government budget is funded by the Welsh Government through the RSG and specific grants, while the rest is financed by locally raised taxes (Ogle et al., 2017). The significance of the NDR in Wales has grown since 2009–10 in the context of the budget cuts implemented by the UK Government to resolve the 2007 global economic crisis. In a similar way to that of England (Phillips and Simpson, 2016), the Welsh local government has experienced significant cuts of 16% (£805 million) in the RSG provided by the Welsh Government, from 2009–10 to 2016–17 (Ogle et al., 2017). NDR revenue contribution to the Welsh local government annual budgeted income has increased from 10.9% in 2011–12 to 12% in 2016–17, at a value of around £1 billion (Luchinskaya et al., 2017). Publisher Copyright: © The Author(s) 2019.

PY - 2019/2/1

Y1 - 2019/2/1

N2 - The shape of local government finance in the United Kingdom is changing. The UK Government has been promoting fiscal devolution in the context of austerity following the 2007 global economic crisis. Consequently, local government finance is becoming an increasingly important issue. According to the current regulation, the revenues from business rates, a local tax on non-domestic properties, are pooled to the Welsh Government and then redistributed to the councils, based on their adult population. In the context of fiscal devolution, and following England and Scotland, which adopted retention of business rates income, the discussion for the local retention of business rates revenues in Wales is topical. This paper looks at the organisation of the current business rates system in Wales and the impacts of a potential local retention. It provides a rigorous review of the current state of business rates scheme and the features of the councils according to the net difference between business rates, settlements and contributions. The findings suggest that the current system financially backs the economically disadvantaged Welsh councils, whereas a local retention of business rates income would possibly polarise the uneven allocation of local funding.

AB - The shape of local government finance in the United Kingdom is changing. The UK Government has been promoting fiscal devolution in the context of austerity following the 2007 global economic crisis. Consequently, local government finance is becoming an increasingly important issue. According to the current regulation, the revenues from business rates, a local tax on non-domestic properties, are pooled to the Welsh Government and then redistributed to the councils, based on their adult population. In the context of fiscal devolution, and following England and Scotland, which adopted retention of business rates income, the discussion for the local retention of business rates revenues in Wales is topical. This paper looks at the organisation of the current business rates system in Wales and the impacts of a potential local retention. It provides a rigorous review of the current state of business rates scheme and the features of the councils according to the net difference between business rates, settlements and contributions. The findings suggest that the current system financially backs the economically disadvantaged Welsh councils, whereas a local retention of business rates income would possibly polarise the uneven allocation of local funding.

KW - business rates

KW - local finance

KW - local taxation

KW - public services

KW - Wales

U2 - 10.1177/0269094218824272

DO - 10.1177/0269094218824272

M3 - Review

AN - SCOPUS:85060688345

VL - 34

SP - 10

EP - 32

JO - Local Economy

JF - Local Economy

SN - 0269-0942

IS - 1

ER -