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MPs call for business rates reform

The Business, Innovation and Skills Committee has concluded that the current business rates system is "not fit for purpose" and urged the Government to address its "fundamental flaws".

A report by the committee of MPs calls for a "wholesale review" of business rates to investigate whether retail taxes should be based on sales rather than property values.

The committee also recommended the Government examine whether retail needs its own taxation system and how often revaluations should take place.

In the interim, the committee has called for:

  • A six month business rates amnesty for firms using empty properties
  • A review on whether rates should be linked to CPI or RPI averages
  • Annual increases to be linked to 12 month RPI or CPI averages, with a cap at two per cent.

Adrian Bailey, chair of the Business, Innovation and Skills Committee, said:

"Amongst the many challenges they face, business rates are the single biggest threat to the survival of retail businesses on the High Street. Since the system was created the retail environment has changed beyond all recognition."

Commenting on the report, Helen Dickinson, director general of the British Retail Consortium, said:

"This report must be the final nail in the coffin of the question: do business rates need to be reformed?

"They do. Business thinks so. A committee of Parliament thinks so. We very much hope the Government will think so too."

Dr Adam Marshall, executive director of policy at the British Chambers of Commerce, argued that business rates don't just affect retailers:

"It is good to see Parliament recognise that Britain's business rates system is broken and in need of fundamental reform. But politicians must remember that the business rates system is failing all of our businesses - not just the high street.

"We need thriving high streets, but business rates are also the reason many manufacturing and services companies put off investment and hiring decisions because their rates bills are just too high."