The London Chamber of Commerce and Industry (LCCI) has called for the government be wary of the 'unintended consequences' of changes to business rates and to mitigate against them by encouraging local investment.
LCCI said local government should be allowed to retain all the money it makes from business rates as part of a "greater devolution package" to encourage localised investment, helping businesses mitigate against the effect of the business rate re-evaluation.
Under the re-evaluation, some businesses could face a rate increase of 80 per cent. The LCCI said government should offer enhanced relief for businesses taking the biggest hit from the tax changes.
Chief executive of LCCI Colin Stanbridge said: "Government must take note that this consultation on 100 per cent retention comes at a time of wider uncertainty with more than two in five of London businesses saying that they are worried about the impending revaluation of business rates next month, which is likely to see many in London paying far higher rates from April 2017.
"That may result in many negative impacts across the capital. It is important that businesses in London, in particular SMEs, that are being asked to pay higher rates than the rest of the country can see that in doing so they benefit from investment in helping them set on an in ongoing investment in their surrounding environment."
The intervention from the LCCI comes after various lobby groups joined forces to fight against powers being taken away from the body that administers business rates.