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East Midlands Chamber News

Autumn Statement 2013 – Chamber Called For Business Rates Freeze

©Altogetherfool CC BY-SA 2.0The UK’s second largest Chamber of Commerce urged Chancellor George Osborne to implement a two year freeze on Business Rates in his Autumn Statement.

Ahead of the announcement on 5 December, the Derbyshire and Nottinghamshire Chamber of Commerce (DNCC) wrote to the Treasury to ask for an extensive review and complete reform of the Business Rates system by 2015 to pave the way for the introduction of a new, more responsive and transparent system early in the next Parliament.

Businesses in Derbyshire and Nottinghamshire frequently cite the annual increase in Business Rates – the tax paid by those which make use of non-domestic buildings to support local services, regardless of size, financial performance or ability to pay – as a major drag on growth.

Business Rates are due to go up by 3.2 per cent in April 2014. In the past three years, since the deepest recession in living memory, businesses have had to absorb increases of 2.6 per cent in April 2013, 5.6 per cent in 2012 and 4.6 per cent in 2011.

The cost to the Exchequer of a two year freeze would be around £1.7bn, which is equivalent to just 0.1 per cent of total Government spending. It could be accommodated within the Government’s current fiscal plan by offsetting it against part of its estimated £11.5bn underspend from last year.

In a recent DNCC survey, 80 per cent of respondents said Business Rates were of importance to them over the coming year, with half of these saying the issue was either very important or critical to their business.

DNCC Chief Executive George Cowcher said: “The Business Rates system, as it currently stands, is outdated, fundamentally flawed and in desperate need of reform. Business Rates are a huge drag on business, hitting companies of all sizes long before they turn a profit.

“The current regime is anti-growth. If you tell a business owner their cost base is going to rise, they will respond by cutting investment or by putting recruitment plans on hold.

“It’s illogical for any Government to beg hardworking businesses to drive growth while at the same time making it harder for them to do so by raising their tax bill.

“The Chancellor should use the Autumn Statement to address this by implementing a two-year freeze on business rates, followed by a root and branch reform of the entire system.”

“To create an environment where companies can thrive, Business Rates need to be contained. Ultimately, companies of all sizes need to be clear on taxes and rates bills, so they can get on with generating jobs, wealth and growth with certainty.”