Tuesday, 20 January 2009

Government to hike business taxes on local firms at time of recession

Average business rates bill in West Lindsey may hit £5,932 thanks to Gordon Brown

Labour Ministers in Whitehall were today accused of kicking local firms “in the teeth” as it emerged that the Government is pushing ahead with plans to increase business rates on local firms at a time of economic recession.

The Government is introducing a new law - the Business Rates Supplements Bill - which will allow town halls to increase business rates on local firms by leving a ‘supplementary’ rate on top of current bills. This comes at a time that business rates are already due to rise by a painful 5% in April.

• There are 2,572 premises in West Lindsey which currently pay business rates. The average bill in West Lindsey in 2008-09 was £5,417 raising a total of £13.9 million a year in tax in total from local firms, which is handed over to Whitehall.

• Due to the impending 5% rise, business rate bills in West Lindsey will hit an average of £5,688 from April. If a supplementary business rate were imposed on top, this could push the average bill on local firms to a record £5,932 a year.

• Supplementary business rates are likely to be used to fund local authorities’ current expenditure, rather than new infrastructure. Councils will be pressured into levying supplementary business rates to make up for funding pressures. Firms will not be given a proper vote on whether or not they support the new charge. According to the Government, supplementary business rates could increase taxes by up to £600 million a year if levied by every local authority.

• There will also be a business rates revaluation in 2010, which may increase the bills even more for many firms – especially shops, since retail property rents have risen sharply in recent years. Higher rateable values will worsen the impact of supplementary rates.

Giles McNeill said:
“I fear that supplementary business rates will be yet another backdoor way for Gordon Brown to hike taxes by stealth. At a time when local firms are struggling for their very survival, even higher business rates are a kick in the teeth from the Government.”