Viewpoint - 12/04/2013

Chancellor grandstands as enterprise falters

Now that the dust has settled on a Budget that was more political survival than economic revival, we are disappointed the Chancellor ducked the important issue of business rates reform.

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Headline-grabbing actions on Corporation Tax and the National Insurance ‘jobs tax’ materialised as expected. However, his silence on business rates took many by surprise. Business rates are crippling enterprise and warrant an urgent response from the Chancellor:

  • In a flat-lining economy, rates have risen almost 14% in three years
  • Empty Property Rates (EPR), denounced by business leaders across the board, has failed in its core objective
  • The postponement of the 2015 revaluation penalises those businesses currently struggling most
  • The extension of EPR relief for the ‘speculative new build’ property market is insufficient to kick-start the sector

Business rates bypassed in Budget

The Chancellor elected to keep his Budget message simple: ‘Britain is open for business, offering one of the lowest corporation tax rates in the developed world’. Unfortunately, business rates are a complex area of taxation. Moreover, the competing claims, expectations and demands of ratepayers are irreconcilable in a Budget sound bite. Keen to keep his message simple and attractive to an inward-investing international audience, the Chancellor appears content to avoid the issue.

Vince Cable: next opportunity for reform

Business Secretary, Vince Cable, has made clear his intention to open up a debate on the future of business taxation. He has the dubious tax avoidance arrangements of international businesses in his sights. Yet, it is difficult to conceive of a wide-ranging consultation on business taxation which does not address property tax and the current system of business rates.

Ratepayers must speak with one voice

In such a consultation, business leaders and the representative associations of all sectors must seek to combine their resources and develop a coherent message. We believe reforms should be enacted including:

  • Abolition of rates charge on vacant properties
  • An early revaluation in order to properly reflect current market (rental) values
  • A small business exemption for all businesses with a rateable value of less than £20,000


This article is part of the spring 2013 edition of Rating in Brief.

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