Business rates legislation will hit local economies, says CBI

18 June 2009

A decision by MPs to throw out amendments to the Business Rates Supplements Bill could harm regional economies, the CBI has argued.

As it now stands, the Business Rates Supplements Bill will give local authorities the power to levy extra taxes on businesses to pay for infrastructure projects which benefit local economies.

The CBI has been lobbying for changes to the Bill that would allow firms a vote on whether to support or to reject the additional tax payments for specific projects.

This, the CBI said, would make sure that the extra rates are only raised for schemes that are economically viable and would help to avoid unnecessary levies that could hurt businesses during critical times.

Amendments proposed in and backed by the House of Lords would have introduced just such a vote to the Bill. However, the amendments were rejected in the Commons.

The current wording of the Bill allows for a 2p supplement to be levied on business ratepayers, the equivalent, the CBI said, of a 4 per cent increase in rate bills.

Were this to be applied throughout England, then it would raise £800 million for local authorities, according to Sir Michael Lyons’s Review into local government.

But, the CBI continued, such a figure may be an underestimate because more properties will have rateable values above £50,000 following the 2010 revaluation of non-domestic properties.

John Cridland, the CBI’s deputy director-general, said: “The rejection of these amendments pokes a finger in the eye of British business at a difficult time. We had called for sensible changes that would have ensured more effective local government spending. They would have helped avoid unnecessary, misguided tax supplements that could lead to further job losses.

“The House of Lords weighed the evidence, and reached the view that these amendments were in the national interest. In contrast, the government has ignored these arguments, leading to this misguided vote.”