In recent months, a number of lobby groups have called for local governments to have more control over business rates income in their own constituencies, with communities secretary Eric Pickles even agreeing that councils should be able to keep around 80 to 90 per cent of the tax to make improvements in their own areas by the end of the decade. However, this move does not go far enough for the Local Government Association (LGA), which has this week called for ministers to back a proposal allowing councils to not only keep the proceeds of business rates, but to be able to set their own levels of the tax and keep any growth in income as a result.
Council leaders have warned that, without urgent action taken to address issues in the current system, more local businesses including family firms and independent traders could be put out of business by the deteriorating state of the High Street. With one in seven High Street stores currently lying empty, they believe that giving local authorities more powers over spending would help to address inequalities in the system.
LGA chairman, Councillor David Sparks, believes that the current method of taxation unfairly penalises retailers who base the majority of their business in commercial property rather than online.
He continues; “We need a system of local business taxation which is fit for the 21st century, which supports the areas in which companies operate and which helps, rather than hinders, business and the growth of our economy.
“The idea that the local taxes paid by businesses should be based solely on the size of a building predates the English Civil War: in a world where business and retail is increasingly happening online, a fundamental rethink is clearly long overdue.
“Councils can’t support their local businesses as much as they would like to – there are many areas in which local authorities have been successful in helping new firms to open and keep small businesses alive, but in reality we are working with one hand tied behind our backs.”
At present, business rates for the entire country are set at Whitehall, but council leaders believe they could more effectively regenerate their High Streets if major decisions involving the tax and resulting income were left up to them. For example, areas such as the North East and Northern Ireland could lower business rates as a means of encouraging businesses back on to the High Street – both areas suffer from high vacancy rates and as a result are not very comparable to London, which enjoys high occupancy rates in the majority of its retail destinations.
The LGA also believes this would be an opportunity for local consumers to become more involved in the High Street, encouraging shoppers to come forward and state what types of businesses they would like to see gain tax relief in their areas. While this may be yet another threat to chains such as bookmakers and payday loan companies, it may perhaps finally offer a solution for the ailing High Street.
Do you think local authorities should be able to set their own business rates?
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