CBI calls for business rates reform

The business rates system must be reformed in order to boost growth and investment, according to the Confederation of British Industry, the UK’s leading business group.

The organisation is calling for an overhaul of the “decades-old” business rates model, which it claims is the most damaging to retailers and that by reforming and creating a “simple, fair and competitive system” it could save firms 1.5 billion pounds.

The CBI states that the current system is limiting investment and hampering competitiveness in businesses, and compared to the rest of Europe our businesses are paying too much, as in Germany property taxes are one fifth and in France one third of the level paid by businesses in the UK.

Among the CBI’s recommendations to boost growth, investment and jobs are measures to remove the smallest properties from business rates, implement more frequent revaluations and use the Consumer Price Index as opposed to the Retail Price Index.

Katja Hall, CBI deputy director-general, said: “The current business rates system harms businesses by relying on a decades-old model that no longer reflects economic conditions. That’s made life tough for retailers in particular.

“These reforms are long overdue so it’s good that the Government is following through on its commitment to look closely at how it can help alleviate the most onerous aspects of business rates.”

Confederation of British Industry urges business rates reform

The CBI states by making property valuations more frequent, it is suggesting every three years, rather than the current five, would help to make rates responsive to changes in rent, and improve “fairness” in the rates.

It also adds that by removing the properties with a rateable value of less than 12,000 pounds from paying rates will reduce the burden for SMEs as well as providing significant efficiency savings, which can be reinvested to further improve the system.

Hall added: “We want a simpler, fairer and more competitive system by having more frequent valuations, removing the smallest properties from paying rates, and using the Consumer Price Index so rates don’t outpace inflation.

“However we must avoid devolving rate-setting powers as this will create an uneven playing field, distort growth and add extra costs for companies. Any further moves towards business rates retention must be backed up by clear evidence that it contributes to growth. As far as businesses are concerned the case is yet to be proven.”

The CBI also believes future increases in rates should be in line with the Consumer Price Index instead of the Retail Price Index, a move that it claims could benefit business rate-payers to the tune of 1.5 billion pounds by 2021.

Image: Oxford Street