More Pressure On Government To Reform Business Rates System

More pressure is being put on the Government to reform the business rates system, with MPs on the Department for Business, Innovation & Skills (BIS) Business Select Committee calling on it to make radical reforms in order to help retailers and local economies.

As others have already done, the MPs argue in their report that the tax is no longer fit for purpose and that there should be an examination of whether retail taxes should be based instead on the value of sales.

The Committee’s report also suggests a separate system of business taxation for the retail sector, since, as the Committee’s chairman points out, since the system was created, the retail environment has changed beyond all recognition, so a system of business taxation based on physical property is no longer appropriate “in an increasingly online retail world”.

According to the report, the Government has not gone far enough with previous measures of reform and calls for a six-month business rates amnesty for businesses occupying empty properties, which is more radical than the 50 per cent rate reduction announced in last year’s Autumn Statement.

The Committee also calls for the Government to review whether business rates should be more appropriately linked to the Consumer Prices Index (CPI) or the Retail Prices Index (RPI).

The British Retail Consortium (BRC) has welcomed the report, saying that it builds on the group’s own work in the area. As a spokeswoman for the BRC said, business knows that business rates need to be reformed and now a Committee of Parliament thinks so too.

However, a spokesman for the British Chambers of Commerce pointed out that business rates affect all types of businesses, not just retail, and that reform across all sectors is needed.

He said that business rates are also the reasons why many manufacturers and services companies put off investment and hiring decisions, because their rates bills are just too high.