28 February 2016 16:15
Business rate reform in the balance
There are concerns that the Government is planning to water down its much-anticipated reform of business rates, due to be unveiled in next month's budget.
Business groups have called for a number of changes to the system including more frequent valuations of property and changes to the way the tax is calculated - based on the retail price index rather than the consumer price index.
However, The Daily Telegraph has reported that "it is understood that many of the key reforms British business has been pushing for will go unanswered" and it also said that "the Government is understood not to be in favour of either amendment".
The news comes as the Government predicts councils will collect a record £23.5 billion in business rates next year.
At the Autumn Statement in 2015 George Osborne outlined plans to devolve significant control over business rates to local areas, which would see local councils retain all the revenue they collect in rates and gain new powers to vary rates in some circumstances.
Dr Adam Marshall, Executive Director of Policy at the British Chambers of Commerce (BCC), said:
"Ministers have focused too much on devolving rates powers, and too little on addressing the deep-rooted failings of an outdated and poorly-designed system that places a crippling financial burden on many companies."
Ahead of next month's budget, the British Chambers of Commerce is calling for what it calls "bold action to fix the outdated business rates system", including:
- A light-touch annual revaluation regime instead of revaluations every five years;
- The removal of plant and machinery from the ratings system, which discourages businesses from investing in their premises;
- The permanent abolition of the annual uplift multiplier, which doesn't take into account the performance of businesses; and
- Forward plans for implementing a new regime with a reducing share of business rates revenue as a proportion of overall business taxation.
"Business rates hit companies hard before they turn over a single pound, and discourage investment in premises improvements, plant and machinery at a time when we should be encouraging investment in supporting future growth."