ACS has welcomed comments from Liberal Democrat leader Sir Vince Cable MP on the need to reform the business rates system.
Speaking ahead of the launch of a report on the future of business rates later this month, Sir Vince Cable MP outlined his support for a commercial landowner levy instead of the current system of business rates.
Sir Vince said: “Business rates were a badly designed policy to begin with, and have become an unacceptable drag on our economy. They are a tax on productive investment at a time of chronically weak productivity growth, and a burden on high streets adapting to the rise of online retail. By only taxing land and not the productive capital above it, this reform would remove a major disincentive to investment, boosting productivity and contributing to a necessary revival in UK industry.”
Under the current rating system, retailers that invest in improving their businesses are penalised through higher rates bills. ACS has called on the Government to reform the system so that it incentivises investment by providing time limited exemptions on higher rates bills for retailers caused by property improvements.
ACS chief executive James Lowman said: “A commercial landowner levy or land value tax should be considered among a range of options for fundamentally changing the business rates system which currently isn’t working. We particularly welcome Sir Vince Cable’s reference to promoting business investment, as this is one of the key flaws in the current system. Businesses should be incentivised to invest to encourage growth and help them remain sustainable in the long term.”
Since the last major revaluation in 2017, around one in three convenience retailers have seen an increase in their rates bills with some reporting that their bills have more than doubled.
The Chancellor is expected to address the issue of business rates in his Autumn Budget later this year.
