Laura Sharman 31 October 2019

MPs slam 'broken' business rates system

MPs have urged the Government to reform the 'broken' business rates system and consider alternatives in time for the Spring Statement 2020.

In a new report, the Treasury Committee warns that business rates are outpacing inflation and creates an unfair system that places a greater cost on high street shops and sectors like manufacturing rather than online businesses.

It also found 'tweaking' the current system though a 'complex web' of reliefs demonstrates how broken the system is.

Alison McGovern, the Treasury Committee’s lead member for this inquiry, said: 'It’s abundantly clear that the current business rates system is broken. The tax represents an increasing burden on businesses, particularly those with a physical high street presence struggling to remain competitive.

'The Government must ensure that business rates align with its aim to boost productivity and do not disincentivise growth. For example, many firms have moved away from being dependent on plants and machinery, which were last re-defined in the system in 1993.'

She added: 'The Committee was presented with numerous alternatives to the current system, but none of them had been sufficiently modelled to examine who would be the winners and losers of any change.'

Rachel Kelly, senior policy officer at the British Property Federation, said: 'The Treasury Select Committee’s report makes an important and timely contribution to the growing debate around business rates, and will no doubt add to the momentum for change. What is clear is that the total business rates burden is not sustainable and should be reduced, or it will continue to harm our economy and town centres and hold back investment that we need to make our workplaces more productive and energy efficient.'

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