Tory leadership hopefuls have been urged to commit to reforming business rates, as promised in the party’s manifesto, rather than “throwing around tax cuts like confetti”.
Several candidates vying to be the next prime minister have pledged tax cuts but there has been little mention of business rates, undermining their promises to reduce the burden, according to leading property consultancy Colliers.
By instead reforming rates they could “provide the instant tax cuts they have all already committed to”, said John Webber, Colliers head of business rates.
Webber wants business rates revaluations to take place more frequently than every three years. He is also calling for Tory leadership candidates to signal an end to so-called ‘downward transitioning’, whereby a reduction in a shop’s rates bill is introduced in stages over a number of years instead of immediately following a revaluation. It keeps total business rates revenue-neutral for the government by paying for ‘upward transitioning’, which staggers increases. The system has been widely criticised as making businesses in poorer regions subsidise those in wealthier ones, and therefore being at odds with the government’s levelling up agenda.
“While many of the candidates are throwing around tax cuts like confetti, we are asking that they all commit to a revaluation and levelling up agenda,” said Webber.
“We call on Rishi [Sunak], Liz [Truss], Penny [Mordaunt] and the rest of the gang to announce there will be no downward transition following the revaluation in 2023 and that rates bills will immediately find their true level, comparable to rents.
“We are saying as much in our response to the government’s recently announced consultation on the issue, which ends on 25 July.”
Webber also criticised a five-year business rates holiday for deprived areas suggested by Tory leadership contender Jeremy Hunt, saying it would only add another layer of complexity to the issue rather than provide the reform needed.
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