As the Department for Communities and Local Government revealed that the Treasury collected £21.6 billion in business rates in 2014-15, the British Chambers of Commerce (BCC) is calling on the government to take action to fix the fundamentals of a broken and outdated system.
In October this year 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.
For business, the focus on changing ‘who controls what’ is wrong – as the government has still failed to address deep-seated problems with the outdated business rates model. There is also no clarity on the status of small business rates reliefs that are currently due to expire at the end of this financial year in April 2016.
In June the BCC called for a new rates system that, while still property-based, had 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.
Caroline Williams, Chief Executive of Norfolk Chamber said:
“The current business rates system discourages investment in premises improvements, plant and machinery, and places a crippling financial burden on many Norfolk businesses.
“We are long overdue meaningful reform of the operation and administration of business rates. Norfolk Chamber welcomed the announcement of a review in the 2014 Autumn Statement, but a year later, ministers and officials are still reluctant to engage on matters of substance or offer clarity around the process and timings.”
Dr Adam Marshall, Executive Director of Policy at the British Chambers of Commerce, said:
“Reform of the business rates system has stalled. Ministers have focused too much on devolving rates powers, and too little on addressing the deep-rooted failings of an outdated and poorly-designed system that hits companies hard before they turn over a single pound.”
