The Confederation of British Industry (CBI) has called for a freeze on increases in business rates and called for the government to make immediate amendments a new Bill that will hit property-owning businesses.
It has expressed concern that the increases and extra taxes could cause many small and medium businesses with property to fold.
The CBI first called for a two-year postponement of the 5% increase in business rates that is due to take affect from April.
The 5% increase was based on the RPI measure of inflation in September, which was also 5%. But since inflation shrunk to 0.1% in January, the CBI fears that “it may fall into negative territory.”
The Business Rates Supplement Bill, which gets its third reading in parliament today, would allow local authorities to levy on companies supplementary taxes designed to pay for infrastructure projects which benefit local economies.
These additional taxes would come on top of the 5% increase in business rates, and could total £800m a year according to the Lyons Review into Local Government of March 2007.
“The Business Rates Supplements Bill is designed to help fund projects that benefit local economies, but may back-fire in its present form. It risks placing extra burdens on firms that are fighting for survival, and could lead to more firms going bust. It also risks taxing business for projects that are not what local economies need,” said CBI Deputy Director-General John Cridland.
Manufacturers and retailers are the industries most at risk from any increase to business rates, as they’re the most likely to own property. But any property-owning business will be affected.
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