The Birmingham Post reports today that business leaders and one leading Birmingham councillor have vocally rejected proposals to give councils the power to raise ‘top up’ rates on local firms.
Councillor Tilsley was sceptical of these Supplementary Business Rates (SBRs), saying that the council does not want Birmingham to be seen as a “high tax city” and a spokesman for the Birmingham Chamber of Commerce and Industry stated that there have been instances where businesses have been heavily burdened with red tape and high taxes without experiencing any of the promised benefits.
It’s good to see that there is some hesitation on behalf of senior councillors and extra rates will be considered rather than introduced arbitrarily. The region already suffers from a £10bn output gap when compared to the UK average and this is surely not least because the overall number of business start-ups in the area is well below the country’s average. Birmingham should not be scaring potential new business away with taxes, but instead looking at ways to encourage investment by keeping business taxes low and creating incentives.
The suggested SBRs are supposed to cover environmental and infrastructure improvements, but we should not doubt that if council waste and bureaucracy was stripped back any necessary improvements could be introduced using the money recouped, without additional levies being imposed.
Giving councils the power to raise additional taxes will only encourage them to create more revenue to support wasteful schemes and high town hall salaries. Local government should be forced to budget and where possible make efficiency savings, then they can prioritise what improvements really need to be made and fund them using the ample pot of money they already accrue from business rates. Any scheme that promises to be lucrative for the council at the expense of already over-taxed local business seems unlikely to attract further enterprise, and the money that comes with that, to the area.