New Call for Radical Business Rates Reform

The British Retail Consortium (BRC) are calling for a radical overhaul of the business rates system to be based upon innovative new concepts such as energy use…

Retail trade association the BRC have suggested that the business rates system be radically overhauled and replaced by a system that clould be based upon business’s energy consumption and their ability to create jobs.

In their Road to Reform report, the BRC has said that these innovative ideas could transform the way business rates are paid and have recomended four key areas to look at:

The first is that the focus of the business rates shifts away from being a property-based tax and instead has a basis in, for example, the energy use of a business.

Measure number two is that business rates are affected by the ability of firms to create employment and that there is value to businesses from job creation on a per employee basis, to be capped at an overall proportion of each firm’s business rates bill.

Third is the option to provide a discount based upon the amount of Corporation Tax a business pays, again, capping it at a certain level commensurate with the overall business rates bill.

Lastly, the BRC have recommended that the existing business rates system us simply modernised by being simplified with banded rates and revaluations ocurring more regularly.

These options have been designed by the BRC in colaboration with the professional services firm, Ernst & Young, and are intended to encourage discussion in the Chancellor’s Discussion Document which will look at the subject of business rates amongst other things.

Helen Dickinson, Director General of the BRC, said of the proposals:

"We have a once in a generation chance to fundamentally change the business rates system and the time is right to think creatively and in the best long term economic interests of the UK."

Dickinson continued:

"These potential options would be good for the public, the economy and businesses small and large, while still providing significant tax revenues for the Government. We now intend to analyse each one in more detail and very much hope that we will stimulate discussion that goes beyond tinkering with the existing system."

John Rogers, the Chief Financial Officer (CFO) at supermarket giant, Sainsbury’s, has also been involved in the project by chairing the group of executive level members, added that the current busienss rates system is "outdated and cumbersome and does nothing to encourage retailers to invest."

The BRC is not the first group to push for radical reform of the business rates with the Federation of Small Businesses (FSB) saying only last summer that as many as 7% of small businesses were paying more for their business rates than for their rent.

This time last year the Forum of private Business (FPB) polled its members and found that an incredible 94% of firms said that their business rates were too high.

There has been some good news for busiensses though. In December 2013 George Osborne, the Chancellor of the Exchequor, announced his intention to offer smaller retailers a £1,000 discount on their business rates and a cap of 2% on any future rate rises.

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