Javid says business rates isn't a £3bn tax "grab" because the Treasury lost money last time

 
Helen Cahill
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Warnings Given As April Business Rate Rise Threatens UK High Streets
Opponents of the business rates system have called it a tax "grab" (Source: Getty)

Communities secretary Sajid Javid has defended himself against accusations of a business rates tax "grab", saying that the Treasury has to take in more money because it lost out at the last revaluation.

Business rates have been revaluated for the first time in seven years and the government has increased the amount it is charging businesses to cover the cost of appeals made against the new ratings.

Read more: Government accused of using business rates to make £3bn tax "grab"

In previous revaluations, the government estimated that around four per cent of the total business rates collected will be paid back on appeal. To ensure that the revaluation is revenue-neutral for the Treasury, businesses are charged to cover the cost of these pay-outs.

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Communities secretary Sajid Javid has been leading the changes to the business rates system (Source: Getty)

However, the government has now increased its estimate to six per cent. According to analysis by business rates experts Gerald Eve, this amounts to a £3bn charge for businesses over the next five years.

Answering questions from the communities committee today, Javid said the estimate was increased because the Treasury lost money in the last business rates revaluation in 2010.

“Clearly there are lessons learned from that," he said. "The exchequer doesn’t want to have to lose out and find the money elsewhere."

The new estimate had been checked independently by the OBR for the first time, he said, and it was given the green light.

"The OBR also agreed that with the data that was available that this was an estimate that was fiscally neutral," he said.

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