Coalition to oppose new local business rate
A coalition of business groups has come together in an effort to persuade the government to review its decision to introduce a supplementary local business tax.
The Federation of Small Businesses (FSB), the British Chambers of Commerce (BCC) and the Institute of Directors (IoD) have urged the government to reconsider its plans for a Supplementary Business Rate.
Alistair Darling announced a White Paper on the issue in the pre-Budget report.
Under the plans, shire counties and the Greater London Authority would have the power to charge extra business rates to help fund local infrastructural projects.
The groups have put forward a number of amendments they believe will make the scheme less onerous for businesses should it become law.
They say that no Supplementary Business Rate should be introduced without a vote in favour from a majority of businesses in the affected area. A vote should be called before infrastructure projects are agreed, regardless of the proportion of the money being contributed by businesses. This vote could use the same mechanism as the voting system for Business Improvement Districts (BIDs) that ensures the voice of small businesses is not drowned out by larger companies.
Businesses that do not qualify for Supplementary Business Rates should have an automatic exemption and should not require any application process so as to cut down on red tape.
Should a Supplementary Business Rate be proposed, then the rate revenue should be ring-fenced for specific infrastructure projects.
Supplementary Business Rates should operate for fixed terms, usually the construction life of infrastructure projects, similar to BIDs.
The proposed rateable value threshold of £50,000 below which ratepayers would not pay the Supplementary Business Rate must not be reduced.
Roger Culcheth, the FSB’s local government chairman, explained: “The FSB is firmly opposed to Supplementary Business Rate. However, if the Government is determined to go ahead then it needs to listen to businesses in order to choose the least damaging option. Otherwise councils will use it to raise revenue more easily than if they put up Council Tax - hitting local economies and employers. Without a vote for small businesses in all cases where a Supplementary Business Rate is planned this will simply be another tax on the wealth-creators of our local communities.”
David Frost, director general of the BCC, said: “Business is opposed to the introduction of a Supplementary Business Rate. UK companies are facing enormous global competitive pressures and any additional tax will further harm their ability to compete. If, however, Local Authorities are given the flexibility to introduce a Supplementary Business Rate it is essential that businesses are given a vote. If a Supplementary Business Rate is to provide funds for an infrastructure project that business believes is necessary, and if there is a clear project plan with ring-fenced funds tied to the scheme with the money raised being wholly additional, then the business community may well vote yes in a ballot.”
Miles Templeman, director general of the IoD, added: “The proposed introduction of an SBR will rock UK businesses, not least because such a move increases costs without any correlation to a business’s profits or their ability to pay - Town Halls will be more than happy to avoid a ‘ballot box’ revolt over Council Tax increases. The IoD recognises the important financial contribution that business can make to defined projects with agreed benefits to enterprise, such as Crossrail. However higher rates without a mandatory vote will only deepen the disconnect between local politics and the business community.”
Date:12 October 2007
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