Monday, April 06, 2009

Higher Business Rates

Date: 4th April 2009
Release date: Immediate
Subject: Gordon slams hike in business rates.
Gordon Henderson has accused the Government of pushing local firms and small shops to the wall by hiking their business rates during the recession. Business rate demands are being sent to local firms across Swale and many are seeing startling rises in their bills this year, with the prospect of even bigger hikes next year. After rent and staff, business rates are the third biggest cost that local firms face.

This comes as a survey by the Local Government Association has found that 4 out of 5 councils are reporting an increase in empty shops in town centres. Mr Henderson criticised a number of Government policies that are pushing up tax bills:

· Inflation-busting rise this April: Business rates are to rise by 5 per cent this April, despite the forecast of RPI inflation to be negative, because of a statistical quirk in the way business rate rises are calculated. The burden of rates will go up by £1 billion a year. The average business rate bill in Swale is currently £8164; this rise will push it up to £8573.

· End of transitional relief from the 2005 revaluation: Transitional relief from the 2005 business rates revaluation has now expired, pushing up bills for many firms in April 2009 by two or three times more, and raising another £100 million for the Government.

· Small shops to be hammered by the 2010 revaluation: The April 2010 rates revaluation will hit the retail sector hard, because of the Government’s decision to use April 2008 as the snapshot for the revaluation – when relative retail rents were artificially high compared to industrial and office rents. The resulting rating hikes could push many small shops out of small business rate relief, which means rocketing bills.

· New empty property hike: When Chancellor, Gordon Brown slashed back rate relief on empty properties. As the recession bites, firms are unable to rent out vacant property, but still have to pay rates in full despite no income from rent. This has increased rates by £1 billion in 2008-09 and by a further £715 million from this April.

· Retrospective ports tax: Businesses based in Sheerness docks face a further hammering, as the Government is imposing retrospective hikes on ports firms’ bills, backdated to 2005. This week Mr Henderson met with the bosses of firms worst hit by the tax to hear how it would affect the jobs of local workers. The Conservative Party is putting pressure on the Government to reverse their decision.

· Poor take-up of small business relief: Small firms are not claiming small business rate relief because they have to fill out complex paperwork. In Wales, small business rate relief has been automatic since 2007.

· New supplementary business rate: New laws being pushed through by the Government will introduce a new ‘supplementary business rate’ which could raise taxes by £600 million a year. Local authorities will effectively be forced to levy this charge because cuts to the Local Authority Business Growth Incentive Scheme mean less revenue for councils.

Mr Henderson said:
‘Gordon Brown is dragging local firms down his road to ruin. It is the height of economic madness to be increasing taxes on local firms in the depths of a recession. Local shops in Swale will be hardest hit by these rises, leading to even more boarded up shops on our high street and more job losses.’

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