The British Property Federation (BPF) has added its voice to the calls for a fundamental shake-up of the business rates system following the publication of the British Retail Consortium’s (BRC) Manifesto Milestones.
The publication emphasises the threat that the current business rates system poses to business as a whole, not just the high street, and calls for business rates to flex with the overall economy, which the BPF particularly agrees with.
In its response to the Treasury’s recent Administration of Business Rates consultation the BPF called for the abolition of the RPI (Retail Price Index) escalator, the use of which has meant that business rates have been rising at a rate completely out of sync with economic conditions. It recommends that business rates should instead be pegged to rental values, as these are a proxy for the overall health of the economy.
The consultation response also highlighted the threat that the tax poses to the real estate industry. As rates continue to rise, the BPF has warned that the inevitable squeezing of rents eventually harms new investment and development activity.
Ion Fletcher, Director of Policy (Finance), British Property Federation, said:
“Research carried out by the BRC indicates that 80% of MPs find the business rates system to be unfit for purpose, and we urge the government to take heed of this. Business rates do not just negatively affect the high street, their impact is widespread, affecting small businesses, and landlords and even pensioners who have invested in commercial property and who are now being crippled by empty rates. Ahead of a General Election, now is the time for government to be committing to a full and comprehensive review of this outdated tax.”