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LOCAL BUSINESSES FACE £300MILLION STEALTH TAX LEVY 

The national Business Centre Association (BCA) is condemning the Government’s decision to progress the controversial Business Rates Supplement Bill following its second reading in the House of Commons last week.

The bill proposes devolved power to upper tier* local authorities so that an additional business rate supplement can be levied for investment into local economic development projects.

Jennifer Brooke, executive director of the BCA - the UK’s sole trade association for the business centre and managed workspace industry – warns: “The Government has promised to help businesses in difficult times, but this stealth tax now emerging smacks of a u-turn in policy. It will lay a multi-million supplementary tax burden at the door of UK firms.

“This bill means councils will be handed power to increase a local business rates bill by an additional 10 per cent to support specific initiatives. The responsibility for increasing the rates bills will fall entirely on the shoulders of local council officials.

“Businesses will not be able to vote to support specific initiatives so this tax hike will be driven by local politics. Many local authorities may see this as a simple method of offsetting the ever increasing Council expenditure.

“Rates as a property tax are already the highest in Europe at over 40 per cent of annual rental value. An additional 10 per cent could be terminal for businesses already heavily impacted by the current economic climate.

“Local authorities also need to be aware that businesses may vote with their feet - choosing to relocate to areas where councils are not imposing supplementary business rates.”

There are a number of checks and balances built into the bill designed to prevent ‘over-harvesting’. The supplementary levy will be capped at 2 pence in the pound of the businesses rateable value and will only apply to businesses with a rateable value exceeding £50,000.

Jennifer advises: “Wise local authorities will use this as an opportunity to build partnerships with businesses and other stakeholders in the area, rather than driving business away with unreasonable supplementary rates and poor investment decisions.”

The Rt Hon John Healey MP explained that the bill also includes clauses for the consultation of businesses affected by the levy and “a double lock ballot in cases where the Business Rates Supplement (BRS) will fund more than one third of the project.”

Jennifer added: “There was a mixed response during last week’s second reading and it remains for the House of Lords to be persuaded that the bill is water tight. The Government will have to trust local authorities to have a good understanding of the needs of their local areas and will need to be convinced that the bill will not allow for any profiteering.

“Whilst we acknowledge the changes to the ill-advised empty business rates bill whereby properties with a rateable value of below £15000 will be exempt from paying Empty Property Rates for one year 2009/10 - we are still faced with major concerns about this latest bill which is yet another stealth-tax on local businesses, amidst some very difficult market conditions.”

“The bill s


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