Businesses Hit By Hike in Rates

Government revaluations branded a ‘stealth’ tax by opponents

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Escalating property values could mean retailers will be hit by the increase in business rates, according to a report from property consultancy GL Hearn and Investment Property Databank.

An estimated extra £1.5 billion bill is set to fall at the feet of companies following the Government’s revaluation of business rates.

Every five years the rateable values of all business properties are reassessed and after the Government sent out almost two million bills to firms across the country this week, they were accused by the Conservative opposition of using 'stealth' measures to increase the tax. Tories claim that the new rateable values are equivalent to a 10% hike in business rates.

Phillip Hammond, shadow local government minister, said, "Business rates, like council tax, are being used as a stealth tax by Labour. Since 1997, the business rate tax take has already risen by almost three times the rate of inflation. Soaring taxes on businesses will undermine local firms and increase prices in shops."

And the opposition are not alone in their condemnation. According to business news website Startups, The Federation of Small Businesses (FSB) maintain the revaluation process sees retailers being hit by an average 15.7% rise in business rates.

The British Chamber of Commerce said the current system of business rates works well in the main but complained some firms were being charged disproportionately.
"We do have concerns about the steep rises that many small firms will face a result of the revaluation process," David Frost, British Chamber of Commerce Director General told Startups.
"We supported the increase in the small business rate relief scheme threshold to £10,000 and believe that this should be regularly reviewed to ensure that the burden on small businesses does not become excessive."

By contrast, online retailers are set to benefit from the revaluation, because rates are forecast to decrease by 1.5 per cent for distribution warehouses.

In 2005/2006, £19.9 billion was collected in business rates, representing 4.35 per cent of the total tax income generated by the Government.


December 18, 2007