Finally, MPs admit business rates need a 'total overhaul'

Business rates are 'not fit for purpose', a review by MPs has said. There's something we can all agree on...

by Emma Haslett
Last Updated: 06 Jun 2014

Business rates is one of those topics everyone – from the big boys at the top of international retail chains to the bloke who owns the local cornershop – agrees on. They’re old-fashioned, outdated and are responsible for the downfall of too many retailers, everyone says.

Now MPs have grudgingly admitted they agree: in a report published by the Department for Business, Innovation and Skills (BIS to its friends), MPs said the system should be based on sales rather than the rateable value of a property. In fact, they reckon the retail sector should have its own system of taxation.

The committee says business rates are ‘the main threat to the survival of existing retail businesses in the high street, and the biggest obstacle to entrepreneurial, new retail businesses starting up’. To help those businesses survive/start up, the committee wants:

  • An interim 2% cap on increases in the tax, which will go on until such time as the government gets around to ‘fundamental reform’
  • The six-month rates amnesty for businesses occupying empty properties to be more generous than the current 50% discount

Retailers are, rather predictably, pretty pleased with all this: Helen Dickson, director general of the British Retail Consortium (which recommended in February that rates should be linked to energy usage), pointed out that ‘this must be the final nail in the coffin of the question "Do business rates need to be reformed?".’

Just to be clear, she added: ‘They do.’ Your move, Mr Osborne…

(Ps. The committee also wants the government to publish how it has spent the £2.3m it earmarked under the much-maligned Portas Pilots schemes, as recommended by the effervescent Mary Portas. Apparently, it promised to tell us all in October 2013, but has yet to report. BIS is worried the cash is sloshing around council coffers, merrily earning interest. MT isn’t holding its breath for the figures to be delivered any time soon…)

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