The case for freezing business rates is stronger than ever before

November 19, 2013 9:38 AM

The Daily Telegraph has today called on the Chancellor to freeze business rates at the forthcoming Autumn Statement. They’re absolutely right to do so: further pressure is needed on George Osborne to prevent the disastrous consequences that a business rate hike would entail. Last year we joined forces with the British Retail Consortium to call for a freeze in business rates. The compelling argument to ease the pressure on struggling businesses has not gone away. If anything it is stronger today than ever before.

Business rates went up 4.6 per cent in 2011, 5.6 per cent in 2012 and 2.6 per cent this year. It is a tax that must be paid in the good times and the bad. They are based on a property’s rateable value and increases are based on September’s Retail Price Index (RPI) figure. That means a further increase of 3.2 per cent is due next April. Another substantial rates hike would be bad news for all businesses.

Politicians are keen to talk about how they want to help hard-working families or tackle the cost of living crisis. But hiking business rates is a perfect example of how too often politicians are only making it tougher on those that are already struggling. Tax increases have to be paid for by someone, whether they are levied on individuals or a collection of individuals who form a business. A business doesn’t pay tax any more than a toaster does. Rate hikes will in part be passed on to consumers and employees, either through higher prices, lower wages, fewer jobs or a combination of all of the above. These are all things that politicians tell us they want to avoid so the pressure is on them to live up to the rhetoric and not increase business rates.

Labour has promised to cut business rates, but unfortunately they’ve said they will do so by increasing Corporation Tax. Not only is this an ugly attempt to create false dividing lines between firms, it would damage a UK economy that is benefiting enormously from a lower, more competitive Corporation Tax rate. You don’t rob Peter to pay Paul: instead it’s time to get serious about cutting spending.

So when the Chancellor stands up to deliver his Autumn Statement he should announce a freeze in the rates. A 3.2 per cent rise would pile pressure on employers and further damage the British high street. It would mean more empty shops and fewer jobs, especially for young people. The Telegraph is right, freeze the rates George!

Latest Blogs: