BRC proposes Replacing Business Rates with Energy Tax

Posted on 18 February, 2014 by Kirsten Kennedy

Recently the prime minister hinted that business rates reform may be on the way as the momentum for change gathers momentum. Last week Lambert Smith Hampton responded to this by publishing a set of proposals that it would like to see included in any future legislation. Today the British Retail Consortium (BRC), which spent a large part of last year petitioning the government for a freeze in rates, presented its own proposals.

BRC-proposes-Replacing-Business-Rates-with-Energy-Tax (2)

In a document entitled The Road to Reform, the industry body outlines four proposals, the most radical of which involves switching the property tax to one based on energy usage.

Under the BRC’s plans, businesses or landlords which take steps to cut their energy usage such as installing solar panels or recycling rainwater would face a lower charge than those with high energy usage – this could also go some way in tackling Britain’s forecasted power supply issues in the coming years.

The other proposals are based on rewarding employment, supporting successful businesses and modernising the existing system by introducing more frequent revaluations.

Helen Dickinson, director general of the BRC, says; “We have a once in a generation chance to fundamentally change the business rates system and the time is right to think creatively and in the best long term economic interests of the UK.”

Business-Rates-Reform

The proposals have been welcomed by the British Property Federation (BPF), which agrees that a fundamental review of the current system is required. The BPF is particularly in favour of the suggestion that revaluations should be undertaken on a more frequent basis which will ensure that rates will better correspond with current rental values.

Chief executive Liz Peace said; “This report is a helpful contribution to the debate surrounding business rates and underlines the need for reform to help repair this broken tax.

“The business community must now think widely about what reform should look like, and to seek a system that is fair, certain and efficient and which raises revenue without hampering growth.

“We hope to see the Chancellor commit to a fundamental review of business rates in the upcoming Budget.”

However, the proposals have not met with universal approval, with manufacturer’s organisation EEF saying that it would be unfair to the sector to switch to a tax based on energy usage.

Chief economist at the EEF, Lee Hopley, said; “We see no logic in linking taxes which fund local services with business energy consumption.

“Manufacturers already face a higher burden in terms of their energy costs as a result of a raft of green levies.

“That said, we do welcome the Government committing to review the business rates system; a range of issues have been identified with the current regime from the uprating mechanism to the administration.”




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