41 trade unions call for urgent reforms to ‘outdated and outmoded’ business rates system

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The Confederation of British Industry (CBI) and British Retail Consortium (BRC) along with 41 UK trade associations have outlined how action by the Chancellor in this month’s Budget to reform the business rates system could unleash a wave of investment across government priorities, including net-zero and levelling up.

The existing business rates regime was described as “outdated and outmoded”, and said to act as a drag on the government’s goal of a high wage, high productivity and high investment economy.

The current system actively disincentives business investment in decarbonisation, said the statement.

“Action to get investment flowing into and around the UK is sorely needed to reinforce our recovery,” CBI chief economist Rain Newton-Smith said.

“The government deserves credit for convening the supply chain advisory group to unblock temporary challenges, but as we’re seeing with energy prices, there is no substitute for longer-term planning and investment.

READ MORE: Barclays boss: UK to have its biggest economic boom since 1948 

“The Chancellor has an opportunity to fix this, starting with fundamental business rates reform at the Budget and Comprehensive Spending Review.”

Newton-Smith added “By setting out an approach which attracts investment, he can equip the UK with the tools it needs to secure the high wage, high productivity and high skill economy of the future.

“With up to half of business investment potentially subject to business rates, it has literally become a tax on investment.

“If we as a country are to truly level up and meet our net-zero commitments, leading by example in the year we host Cop26, then unleashing a wave of business investment should be the focus.

“Up to 50 per cent of business investment is potentially subject to business rates, so the financial burden on firms is high and the 2023 revaluation could see it increasing further.

“Therefore, with the current business rates system acting as a tax on investment, action is needed to rebuild the UK’s international competitiveness.”

The joint statement was backed by trade associations including the British Retail Consortium, UK Hospitality and the Society of Motor Manufacturers and Traders, representing around 261,000 businesses and nine million employees.

Shadow chancellor Rachel Reeves added: “The business rates system is no longer fit for purpose. It penalises high street shops in favour of online giants and deters businesses from investing in new green technologies.

“That’s why Labour announced that we will cut, and eventually entirely scrap, business rates, replacing them with a new system of business taxation that is fit for the 21st century.”

A government spokesperson concluded: “We’ve provided extensive business rates relief worth £16 billion to support businesses and the high street throughout the pandemic, with support continuing until March next year.

“We’ve also shown we are committed to supporting investment through the tax system, extending the Annual Investment Allowance increase for another year and introducing the super-deduction – the biggest business tax cut in modern British history.

“We’re currently conducting a review of business rates which will conclude in the autumn.”

with PA Wires

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