Record business rates haul highlights need for real reform
19 February 2016
As the government predicts councils will collect a record £23.5 billion in business rates next year, the British Chambers of Commerce (BCC) is calling for bold action in the Budget to fix the fundamentals of a broken and outdated system
At the Autumn Statement in 2015 the government 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.
The BCC is calling for the government’s review of business rates, due to report at the next Budget, to introduce a reformed system with the following features:
• a light-touch annual revaluation regime, to stop businesses being hit hard by an increase every five years;
• the removal of plant and machinery, and micro-generation, 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
• the publication of a business taxation review with forward plans for implementing a new regime with a reducing share of business rates revenue as a proportion of overall business taxation.
Dr Adam Marshall, Executive Director of Policy at the British Chambers of Commerce, said:
“The government has yet to deliver meaningful reform of the business rates system, despite repeated calls from business.
“Ministers have focused too much on devolving rates powers, and too little on addressing the deep-rooted failings of an outdated and poorly-designed system that places a crippling financial burden on many companies.
“The recent focus on changing ‘who controls what’ is the wrong approach when the government has still failed to address deep-seated problems with the current model.
“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.”