Business rates unsustainable and unintelligible says CBI boss
0John Allan, president of the Confederation of British Industry (CBI), has called on the main political parties to adhere to their manifesto promises to undertake a comprehensive and independent review of business rates.
Addressing the industry body’s conference on the tax last week, he said: “The business rates system has – over time – become uneconomical, unsustainable, and frankly unintelligible.
“In short, it’s a system in need of reform.”
Allan criticised the way the tax discourages businesses from investing in their property, as improvements will result in a higher valuation.
He said any revaluation cycle beyond one year – currently a three-year period is envisaged – will mean that the system will lag behind the economic cycle.
The long gaps between revaluations mean that rates do not reflect falling property values in areas that are struggling, burdening businesses with unfairly high taxes.
However, non-domestic rates also undermine areas that are doing well, as their businesses become liable to sharp increases in their bills.
Allan cited the case of Hackney which has seen vibrant growth, attracting nearly 20,000 start-ups last year, but where the latest revaluation has led to firms facing an increase of almost 50% in their business rates.
