Trade associations urge Sunak to revise “unfair” business tariffs.
Chancellor Rishi Sunak urgently needs to reform the country’s “unfair” and “unproductive” tariff system, said dozen of business associations.
In a statement, the Confederation of British Industry (CBI) and 41 groups of companies, representing a total of 9 million workers, urged the Treasury Department to address the issue in this month’s budget.
The signatories warned that the government would fail in its efforts to level the land and hit net zero unless it significantly changes business rates, a levy on non-residential properties like shops and warehouses.
They said the “obsolete” tax is contributing to the demise of high street stores across the country and creating negative incentives for green investments.
“When a company invests in solar panels or other equipment and machinery to improve its property, it increases its bill,” the statement said.
In its current form, the system is “not competitive, unproductive and unfair” and does not do well compared to property taxes in other countries such as Germany, added the industry groups.
To support the UK’s economic recovery, business associations called for a “modern system that rewards investment, creates net-zero turbo burdens and stimulates growth for the next decade”.
To this end, they called for a reduction in business rates, an increase in the rate of revaluation and the creation of a “greener” model.
Rain Newton-Smith, chief economist at the CBI, said action on the issue was “urgently needed” to revitalize the economy.
A fundamental reform of corporate tariffs would enable the country to achieve high wages, productivity and skills in the future, he argued.
Michael Hawes of the Society of Motor Manufacturers and Traders agreed that the system is “overdue for an overhaul”.
“The current agreements that anyone who wants to invest in new equipment – especially green technology – see business rates rise is a perverse stumbling block to investment and productivity improvements,” he said.
Melanie Leech, chairwoman of the British Property Federation, meanwhile, said the current approach poses a “significant risk” to high street businesses and inhibits the ability of city centers to modernize.
At last month’s Labor conference, Shadow Chancellor Rachel Reeves said her party would cut business tariffs.
“We’re going to be doing the biggest corporate tax overhaul in a generation so our companies stay ahead of the curve and don’t have to watch opportunities arise elsewhere,” she said.