Member Article

FSB calls for "radical overhaul" of business rates

Small businesses have called for a major rethink of business rates, after one out of ten interviewed said they pay more in rates than in rent.

The Federation of Small Businesses (FSB) surveyed nearly 2,500 FSB members to find that 20% pay full business rates, with 30% companies receiving some form of rates relief such as small business or rural rate relief.

FSB called for a “radical overhaul” of the system, which they called cumbersome and overly complex, while they urged the Government to carry out a formal review of how rates are calculated.

While business rates generate a huge sum for Treasury, it is a tax not related to economic activity and this needs to be addressed, said the FSB.

Another inflationary rise is due to be calculated in September and the Federation said it wants to see the Government change the inflation index used to calculate annual increases from the RPI to the CPI.

FSB said this could bring it into line with other government policies and that changing the indexation in this way, as recommended by Mary Portas, could help small firms on the high street.

Richard Gregg, Regional Chairman, Federation of Small Businesses, said: “The current rating system is a blunt tool for maintaining the Government’s income even when everyone else’s is shrinking.

“It takes no account of ability to pay, or changes to economic conditions. It is based on rental values but only adjusts its valuation assumptions every five years.

“Its treatment of empty property is tantamount to a tax on no income, and it continues to use RPI for annual tax increases because it is normally above the Government’s official measure of inflation, CPI. The FSB wants to see a level playing field for all businesses.

“There is no doubt small businesses across the country are struggling for survival. Indeed, business rates are one of the highest costs for most business after wages and rent, and for seven per cent of small business, business rates were actually higher than rent.

“Businesses will continue to be lost as a result of this outdated and unfair system. The Autumn Statement will need a wide range of measures to target relief at businesses most in danger, and it will need to talk to business about a major overhaul of the system.

“It doesn’t work anymore; it is crushing small businesses and killing the high street. That surely can’t be right.”

This was posted in Bdaily's Members' News section by Miranda Dobson .