Council leader hits out at ‘grossly unfair and regressive’ business rates system
- Credit: Archant
Council leader Alan Melton has called for the abolition of business rates and its replacement with either a sales tax or payments based on a company’s profitability.
His comments come amidst claims by Labour that the average business rate bill has risen by £1,500 since the coalition government came to power in 2010.
The Fenland Council leader described the present system as a “grossly unfair and regressive tax” which was hampering growth.
Mr Melton said no matter how much the council protested – and despite individual councillors including himself occasionally intervening- the tax was set by the valuation department of the Inland Revenue and there was little that could be done.
“Business rates are based on rentable values but quite often these rentable values were agreed six or seven years ago and before the recession hit,” he said. “It’s ok having rising values when a business is profitable but in most cases profits are markedly down yet the business rate remains the same or higher.”
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He quote an example of a couple that had hoped to open an antiques shop using empty High Street premises in his home town of Chatteris but pulled out because of the business rates.
“An extra £100 or more a week coming out of a small business – on top of rents or interest if they own the shop- can mean the difference between profit and loss,” he said. “Meanwhile the premises stay empty.”
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He said the council was also faced with a “double whammy” of having to pick up the bill when businesses went bust owing a proportion or the whole of that year’s business rates and this, too, was unfair.
Even the council itself, when faced with under occupancy or tenants leaving local authority owned factory or office units, had to pay the outstanding amounts on business rates.
“At one stage the Government told us we would get to keep 100 per cent of business rates collected, then they changed it 50 per cent but it is still not resolved,” said Mr Melton.
He said the council could , if it wished, give rate free ‘holidays’ for new businesses but the amount still had to be found out of general council funds.
“The government is creaming it, not just this government but successive governments have done it,” he said. “Whenever I get together with other council leaders and we get the chance to lobby Government on this issue we do so. This government is supposedly pro business and keeps talking of de regulation but we have yet to see a reduction or alternative to business rates.”
Mr Melton predicted better times for the council’s coffers as three major supermarkets come on line in Wisbech, Chatteris and, eventually Whittlesey and some of these rates would be used for infrastructure improvements.
One reason the council is giving £800,000 towards the A14 upgrade is in the expectation that the improved road will bring extra jobs and industry to the Fens and in return extra rates would be available to pay for road and other improvements.
“But the problem remains that if big businesses go bust the business rates due in that financial year are our responsibility. If a business defaults Fenland Council still has to pay out of its own resources,” he said.
Mr Melton said if business rates were equated to sales or profits “then it would be an incentive to have more jobs. Meanwhile this grossly unfair and regressive tax impedes that growth”.