Member Article

Labour promise to scrap small business rate hike

Ed Miliband says he will scrap a planned business rates rise if Labour win the next general election.

The Labour leader is expected to tell the party conference in Brighton that such a move would be paid for by scrapping future corporation tax cuts for big businesses.

Currently, business rates are due to rise in April 2015 and Labour believes 1.5 million businesses could benefit from the cut.

The lower rate would be frozen until 2016 and businesses with annual rent of £50,000 or less would qualify.

Simon Walker, IoD director general, said the move was “better politics than economics” and created a false distinction between small and large businesses.

He said: “The main corporation tax rate is paid not only by multinational corporations and FTSE100 companies but by medium sized companies and smaller firms.

“The government has spent three years telling the world that we are open for business, and reductions in corporation tax have been a key part of that strategy. It’s a dangerous move for Labour to risk our business-friendly environment in this way, at the same time as announcing a new bank levy.”

National chairman of the Federation of Small Businesses, John Allan, said: “The Federation of Small Businesses (FSB) welcomes the focus by the Labour leadership on this critical issue for small businesses. It affects thousands of our members across the UK and is one which we’ve been lobbying on for some time. Whilst we welcome today’s announcement, the long-term solution is one that requires root and branch reform, including the Valuation Office Agency. The system is clearly no longer fit for purpose.

“We know that many firms are struggling to pay business rates and FSB research suggests seven per cent of members pay more in rates than rent - and that cannot be right. In addition many small businesses are being forced by local authorities to pay the rates when its beyond their means.”

This was posted in Bdaily's Members' News section by Tom Keighley .