The UK’s top business groups who represent over 9m workers are pressing Chancellor Rishi Sunak to overhaul the business rates regime.
The Confederation of British Industry (CBI), alongside 41 trade associations acting on behalf of 261,000 businesses, have called on Sunak to reduce the burden of business rates on firms at this month’s budget to unlock vast sums of investment.
The statement slammed the current business rate regime for acting as a drag on the government’s ambition to achieve a high wage, high productivity and high investment economy.
The group estimates up to 50 per cent of business investment can be caught by business rates under the present system. Unleashing this potential investment spending could accelerate the drive toward net zero and help the government achieve its levelling up goals, the group said.
Rain Newton-Smith, chief economist at the CBI, said: “With up to half of business investment potentially subject to business rates, it has literally become a tax on investment.”
“Action to stimulate investment, starting with business rates reform, unites firms spanning the whole economy.”
Signatories on the statement included the British Retail Consortium (BRC), UK Hospitality and the Society of Motor Manufacturers and Traders.
Helen Dickinson OBE, chief executive of the British Retail Consortium (BRC), said: “The choice is clear – cut rates and boost investment and jobs, or leave them unchanged and see more shops closed and jobs lost.”
Kate Nicholls, chief executive of UK Hospitality, said: “The current business rates system has long been unfit for purpose and places an unfair burden on all types of hospitality venues. Fundamental reform is long overdue and it’s vital that government recognises the severity of this issue.”
Recommendations to reform business rates included upping the frequency of business rates revaluations and ensuring rates adjust quickly to economic changes.
Business rates are taxes charged on each square foot of non-residential properties. They are calculated using market valuations. However, industry chiefs have scorned the lack of frequency in which property valuations are updated.
The Chancellor will deliver his next budget and spending review on October 27.