Published on December 3rd, 2014 | by The GC Team0
Business leaders welcome Osborne’s pledge for business rates review
Chancellor George Osborne has announced a structural review of business rates in today’s Autumn Statement and capped the inflation-linked increase at 2%. He also announced that business rates relief will be doubled for a further year, and stated that the £1,000 discount introduced last year to help high street shops, cafes, pubs and restaurants would be increased by 50%, to £1,500.
The British Property Federation (BPF) responded to the announcement, stating that it commended the Chancellor for announcing a structural review of the system. Chief Executive Liz Peace said: “For the sake of business competiveness and Government efficiency the business rates system needs to change. We need a system that is more responsive, both to changes in the economy and to the relative position different businesses find themselves in.
“Basing a property tax on nine-year-old valuations is simply unfair and inefficient, and other countries have shown that with the use of technology you can design a far more responsive system. The compounding effect of annual RPI increases is also meaning that a higher proportion of taxation each year is coming from business rates, sucking the blood from our high streets and eroding many other businesses’ competitive edge.
“Undertaking a root and branch review of the system is a big decision which many politicians have shied away from, and it makes today’s announcement particularly welcome. We hope it is no-holds-barred and will deliver something fit for the 21st century, and one that benefits all sectors of the economy. We look forward to making a positive contribution on that basis.”
Helen Dickinson, British Retail Consortium Director General, said: “We very much welcome the commitment to undertake a comprehensive review of the business rates system. We want a system that brings investment and jobs to the high street without punishing retailers who trade online. The retail industry is the largest rates payer, contributing over a quarter of the total rates tax take. Today’s short-term support package will be of enormous help to those struggling to keep their businesses open on the high street.
John Allan, FSB National Chairman, said: “This urgent review of the business rate system is critical to supporting small businesses. The current system is out of date and needs to be put out to grass. It’s complicated, opaque, regressive and unresponsive to changes in economic conditions. Many of our members tell us paying business rates is their third biggest cost after rent and wages, yet the tax is poorly targeted and not based on ability to pay.
“All businesses will be grateful for this review, but let’s be absolutely clear on what businesses want: fundamental reform of the business rate system. The announced package of renewed reliefs will also be essential, as they will help bridge the gap until fundamental reform can deliver the change everyone agrees must now come.”