Government legislation on additional business rates criticised

A proposed law allowing local authorities to impose additional rates on small businesses is being criticised by the Forum of Private Business (FPB). The Business Rate Supplements Bill was not mentioned in the Queenís Speech, but has been announced as part of 2009ís legislative programme. The FPB believes that small firms already pay too much in tax, and is opposing plans to levy supplementary business rates (SBR) from 2010.

If passed by Parliament, upper-tier authorities would be able to impose additional rates of up to two pence in the pound on business properties with a rateable value of more than 50,000.

The FPB is disappointed that, despite vocal opposition, the Government intends to press ahead with this legislation, said Nick Palin, the FPBís Director of Finance. It is deeply unpopular. Our members believe they already pay more than enough in taxes. These supplementary business rates would be imposed at a time when small firms could be coming out of a recession. They would present a considerable barrier to growth.

He added: Further, the FPB will campaign to ensure that local councils do not try to make up for losses of deposits in foreign banks by targeting small businesses.

The Government is arguing that the additional revenue generated would allow councils to fund local infrastructure projects. Richard Gayfer of Scanfit Limited, Norfolk, disagrees.

This is another stealth tax. My local council treats me as a cash cow in exchange for what I see as no increase in the services provided. In fact, I believe that the opposite is true. For example, I have to pay to have my rubbish taken away and it took nearly a year for the council to get yellow lines painted on a nearby main road where there was a parking problem, said Mr Gayfer. Many companies are already thinking of making redundancies because of the current economic environment, and an increase in business rates will mean they will have to consider making even more. Council leaders are not business leaders, they simply do not understand the difficulties of small firms.

The Bill places a legal duty on authorities to consult on the imposition of supplementary rates, and will also allow businesses to vote on any proposals where the supplement funds more than one third of a project.

Responding to laws unveiled in the Queenís Speech, the FPB welcomes the announcement that the Government plans to hold the banks to account in the Banking Bill, which contains measures to allow the Government to intervene directly in failing banks, and give the Bank of England a formal role in overseeing inter-bank payments. However, the FPB is concerned that extending flexible working arrangements to staff with older children could prove too costly for small firms with fewer employees.