Treasury committee urges reform of ‘broken’ business rates system
Calls for the government to rethink its business rates system are being made in the run-up to the general election, with politicians and businesses urging reform amid mounting pressure on Britain’s high streets.
An influential group of MPs has asked the government to examine alternatives to the controversial property tax, which generated more than £30bn for Treasury coffers in 2018-19.
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The Treasury committee branded the current business rates system “unfair” and “broken” in a report released this morning, echoing calls from business leaders and firms for ministers to find an alternative to the policy.
Pleas to shake up the business rates system have mounted as political parties draw up their manifesto promises ahead of the upcoming December election, with high street retailers in particular flagging the issue.
“It’s abundantly clear that the current business rates system is broken,” said Alison McGovern, the treasury committee’s lead member for the inquiry.
She added: “The tax represents an increasing burden on businesses, particularly those with a physical high street presence struggling to remain competitive.”
Today’s report has also slammed the appeal system known as check challenge appeal (CCA), introduced in 2017, saying that it was “unacceptable” that as of March this year, 16,000 appeals made to the 2010 listing remained outstanding, years after they were first raised.
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“Businesses should not be asking their prospective politicians over the next few weeks what they are doing on Brexit – what they should be asking them is how they will unravel the mess that is business rates as clearly evidenced by this report,” said John Webber, a business rates expert at Colliers.
He added: “The CCA is an experiment being tested on ratepayers and failing. The multipler when fixed in 1990 at circa 30 per cent has risen without cause to reach 50 per cent plus today. Politicians of all persuasions should hang their heads in shame that it has reached this unsustainable level.”
Among the potential alternatives flagged by MPs in today reporter were land value taxes, online sales levies, profits taxes, single consolidated taxes and hybrid taxes.
Physical retailers have been arguing for an overhaul of the business rates system amid mounting challenges on the high street, which has suffered a growing rise in vacancies as firms struggle to turn a profit.
A Treasury spokesperson said: “We concluded a fundamental review of business rates in 2016 and have since introduced reforms and reliefs saving businesses more than £13bn over the next five years.”
They added: “This includes £1bn of support to the high street by cutting bills for small retailers by a third, and £6bn of savings for all firms through switching the indexation of rates to CPI.
“We will respond to the Select Committee’s report in due course.”