Mark Rigby: Review the business rates yield too chancellor
News
by
Mark Rigby, chief executive, CVS
Forecasts by the Office for Budget Responsibility now reveal that, by the end of the new five-year tax cycle for business rates, in 2021/22, revenue is likely to be £33.7bn.
Undoubtedly this will fuel calls for the amount businesses actually pay to be incorporated within the government’s commitment to review the tax to make it fit for purpose in the 21st century economy, given the growth of the digital sector.
Over the next five financial years, starting in April, rates revenue is projected to net councils and the Treasury an extra £4.9bn compared with 2016/17 – up by 17%.
Forecasts by the Office for Budget Responsibility now reveal that, by the end of the new five-year tax cycle for business rates, in 2021/22, revenue is likely to be £33.7bn.
Undoubtedly this will fuel calls for the amount businesses actually pay to be incorporated within the government’s commitment to review the tax to make it fit for purpose in the 21st century economy, given the growth of the digital sector.
Over the next five financial years, starting in April, rates revenue is projected to net councils and the Treasury an extra £4.9bn compared with 2016/17 – up by 17%.
One of the main bones of contention for business is the amount the actual system generates in revenue with property taxes in the UK, which include council tax and stamp duty, already the highest of any G20, EU and/or OECD country both as a percentage of overall taxation and GDP.
With budget constraints and deficits, and as we are about to trigger Article 50 and leave the EU, we need to be more creative at the way we look at business rates. I am left in no doubt that the revenue which flows from the system must be looked at more holistically within the overall context of the economy and other taxes, and not simply as a guaranteed revenue stream.
We need to fully understand the impact of business rates on the decision making processes more than ever post-Brexit. Could lower business rates act as a catalyst to drive greater economic growth and create additional employment? Would those additional taxes compensate for any loss in revenue for business rates? They are the conversations that must now be had with the government and should form part of the government’s commitment to a review.
The last time the government reviewed whether business rates were competitive was 13 years ago in 2004 as part of Sir Michael Lyons enquiry which reported back in 2007.
Autumn Statement 2016
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
£bn business rates
28.8
29
29.3
30.3
31.2
31.8
32.3
Budget 2017
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
£bn Business Rates
28.8
28.8
29.6
31
32.2
33
33.7
-0.2
0.3
0.7
1
1.2
1.4
Mark Rigby, chief executive, CVS
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