Business owners and campaign groups are hoping that Chancellor George Osborne’s Autumn Statement being delivered later today (3 December) will contain the measures they need to grow, and one of the most urgent calls over the past year has been a reform of business rates.
This tax is currently calculated according to the rental value of the property used by a business but, given that it dates back to the Poor Law of 1601, critics say that it is completely outdated and needs an overhaul if it is to be “fit for purpose” for the modern age
According to detractors, the rates are often so high that they hamper growth and expansion and make us out of synch with the rest of Europe. In addition, they ask, in a digital age, why should the rate be based upon the physical space occupied by the business and not by the income it generates?
Meanwhile, another argument against the way business rates are currently calculated is that it is the only tax that does not fluctuate with the economic cycle, meaning that businesses have to pay the same regardless of economic conditions.
One critic even argues that business rates should be abolished altogether for smaller businesses, stating that of the 1.7 million commercial properties on which business rates are paid, about one million belong to small businesses, but if these were exempted, it would only reduce the Government’s tax take by 6 per cent.
He goes on to say that, once the costs of collecting the taxes are taken out of the equation, the Government would still raise roughly the same amount of money and adds that the rate should be calculated annually and not every five years as it is at the moment.