MPs call for Business Rates Reform

Posted on 4 March, 2014 by Kirsten Kennedy

The issue of business rates has proven controversial in recent months, with bodies such as the British Retail Consortium (BRC) repeatedly pushing for the government to find a solution which works best for small businesses. However, while the government has promised to look into the matter, experts were concerned that their solution would be to simply tweak the current system rather consider the complete overhaul many are demanding.

MPs-call-for-Business-Rates-Reform (2)

Yet a new report by the Business, Innovation and Skills Committee may prove to be the turning point in the debate, with the group of MPs claiming that the system currently in place is in need of “fundamental reforms.” As a result, it is calling upon the government to urgently address the issue and implement a “wholesale review” in order to allow the growth currently sweeping through the majority of UK industries to continue.

Adrian Bailey, the chairman of the committee, says; “Among the many challenges they face, business rates are the single biggest threat to the survival of retail businesses on the High Street.

“Since the system was created the retail environment has changed beyond all recognition.

“A system of business taxation based on physical property is simply no longer appropriate in an increasingly online retail world.”

The report calls for an overhaul of the system to the extent that commercial property taxes are scrapped in favour of a tax based upon the value of business turnover. In addition, it suggests a separate business taxation system could be implemented for the retail sector, meaning that small High Street shops could pay lower rates in order to invest further in growth.

These points were welcomed by the BRC, which has already successfully petitioned for a freezing of rates for the next two years whilst the future of the system is addressed. Director general Helen Dickinson was optimistic that the support of MPs will force the government to consider carefully the complete reformation of the system.

However, the report was not universally well received as it tended to focus heavily upon the impact business rates have on firms within the retail sector rather than British industry as a whole. Director of policy at the British Chambers of Commerce, Adam Marshall, argues that “business rates are also the reasons many manufacturers and services companies put off investment and hiring decisions”, meaning reform across all sectors is necessary.

CVS chief executive Mark Rigby echoed this sentiment, and went on to voice his concern that any favours given to the retail industry in terms of taxes would cause businesses in other sectors to suffer.

He said; “The government is looking to collect £25 billion.

“If retail reduces the amount it pays, someone else will be paying more.”

Which option for the future of business rates suggested so far do you think would work best in terms of supporting overall UK growth, or do you think that the majority of reports have focused upon giving the retail industry an advantage at the expense of other sectors?




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