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Business rates vote introduced as retailers face hike in April

Published: 15 December 2010
A new legal requirement that businesses must vote in favour before any Business Rates Supplement (BRS) is introduced has been hailed as a "major victory" by the British Retail Consortium (BRC).
Business rates vote introduced as retailers face hike in April
English local councils outside London must poll businesses and secure majority support before any BRS is introduced, as part of the Government's Localism Bill published on Monday.

Since April 2010, councils have had the power to add up to 5% to businesses' rates bills to fund local economic development and infrastructure projects. Over the past three years, the BRC has campaigned for compulsory business ballots to ensure councils can only raise rates for projects which have business support.

BRC calculations indicate retailers in England (outside London) could have faced more than £125m of extra tax each year. Now that can only be imposed where they agree to it.

BRC director general Stephen Robertson said: "Compulsory business ballots are a major victory for the BRC on behalf of vulnerable retailers big and small. It would be fundamentally undemocratic to put extra taxes on small businesses without establishing their views first and assessing the potential impact on jobs.

The BRC also welcomed the option to reduce business rates where this would support regeneration and growth.

However, retailers face a huge hike in business rates next year, as April's business rates increases are expected to be based on last September's 4.6% Retail Price Index (RPI) inflation, the BRC has warned.

According to the organisation, this will lead to much higher costs than stores can afford.

Commercial property taxes for England and Wales are currently worked out using September's RPI, with the new charges introduced the following April.

For future years, the BRC is calling for an alternative approach to allow stores to budget more easily, such as using the Consumer Price Index or calculating a 12-month average RPI to iron out volatility in the monthly figures.

Mr Robertson commented: "It's deeply disappointing that the Government is ploughing on with an excessive increase in business rates based on one random month's inflation figure. Against a background of public sector job losses, falling consumer confidence and weak sales, there is a danger this will drive up inflation, hitting customers in the pocket."

He added: "For the future, the Government must move away from this discredited business rates roulette to a fairer, more predictable formula."

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