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TAX on business premises is a longstanding problem in this country.
Our business rates tax is three times higher than the OECD average alone.
High streets in Britain have been routed by lockdown[/caption]
Karan Bilimoria is calling for changes in the business rates system[/caption]
Now despite the hardships many British businesses have faced since the Covid-19 crisis began, the economy is looking healthier today than we might have feared last year.
But it’s consumer spending doing much of the heavy lifting. If our recovery is to get on to a more even keel, we really must get businesses investing more – the Government’s ambitions to level up the country and reach net zero will stand or fall on succeeding here.
One of the largest obstacles facing enterprises is a business rates tax system stuck in the past – the costs on an individual business are far too high.
It not only helps to hollow out our struggling high streets, but also holds back those on the up.
Even before the pandemic, our high streets were facing a real battle when up against online retailers – Covid-19 only made that tougher.
‘STRANGLE’
Recent data suggests one in seven high street shops now lies empty. The list of our high street favourites – from department stores to small independents – that have gone for good, grows longer day-by-day.
As founder and chairman of Cobra Beer, I know just how much of a strangle the current system puts on restaurants and pubs, up and down the land.
The business rates system in England is unfair, uncompetitive and unproductive.
And the impact stretches well beyond shops; from factories and airports to offices – any business with a physical footprint.
While the Government seriously stepped up in its support for business at the height of the crisis – including relief on business rate taxes – major reform is long overdue.
The Government is working hard to turn the situation around, expecting to report in the autumn.
CHANGE NEEDED
Don’t get me wrong; business rates are – and should remain – an integral part of our tax system. But businesses need it to change and change now.
Fail to act and we also risk stalling much-needed investment in lowering carbon emissions. The bleak assessment in this week’s UN climate report only makes the need for action all the more urgent.
Perversely, the business rates system in England – and elsewhere in our four nations – works against firms trying to make their buildings more energy efficient: if firms spend on upgrades, they are rewarded by paying higher tax rates!
So what to do? For starters, the CBI wants to see a freezing of rate increases in England beyond the planned revaluation in 2023, and also move to a system of annual revaluations by 2026.
This means that rates adjust quickly to economic changes with no shock rises, and for ratepayers where their bill comes down with property values, they must be able to benefit from reductions immediately after a revaluation.
Existing machinery and new technologies linked to the green agenda such as solar panels should be excused from the tax.
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All this and more can help make our outdated business rates system into a tax that is fit for the future.
A system that unleashes the transformative power of business investment to help, rather than hinder, our shared ambitions to save our high streets, cut our carbon emissions, level up the country and make our whole economy far more competitive.
Lord Bilimoria is CBI President and founder and chairman of Cobra Beer.
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