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Welcome reform but a rethink over need for business rates says Folkestone and Hythe MP

Contributed by editor on Feb 22, 2017 - 06:05 AM

 

Constituency matters... a weekly column by the Member of Parliament for Folkestone and Hythe, Damian Collins 22 February 2017.





The revaluation of Business Rates has provoked considerable interest and concern over recent weeks.

 

This is the first revaluation for seven years, and the new bills are due to be sent out to businesses over the next couple of weeks. The revaluation itself has to be neutral for the government in cash terms; so it is not looking to raise additional funds by increasing rates.

 

Instead, the revaluation should try to determine whether the rates being paid by individual businesses should go up or down, based on the perceived value of the building they are trading out of.

 

The latest estimate by the Department for Communities and Local Government on the impact for businesses in the Folkestone and Hythe constituency, is that overall business rates should should fall on average by 3.8%. Alongside the review the government has also introduced a £6.7billion package of rate relief, which means that 600,000 smaller businesses will stop paying rates altogether. In rural areas, for example, where there is only one pub or shop in a village, that business will typically receive a 100% exemption from rates.
 

High increase in business rates


However, I am concerned that some local businesses, and particularly smaller firms, might be hit by an unexpectedly high increase.

 

I would ask that anyone who is concerned about their new business rates bill should contact me so that I can take this up with the government department responsible for the revaluation.

 

On Monday, along with other Conservative MPs, I attended a meeting with the Chancellor of the Exchequer, Philip Hammond, to discuss his forthcoming budget statement. The issue of business rate increases was one of the main issues discussed at this meeting, and it is clear that the government wants to see how it can help individual businesses that are caught with a larger than expected rates increase.

 

Spread the rise over  number of years

 

One of the ways, this can be mitigated for, for example, is by spreading the increase over a number of years, so that it does all come in straight away.

Although business rates bills are sent out by the local council, they only keep half of the receipts from them, the rest goes to the government. However, by 2020 all of the business rates will go towards funding the services delivered by the local councils.

 

Rethink

 

This means that councils will have an even bigger incentive to work with local businesses, as their success will have a direct correlation with the income of the council. I believe that this is a welcome and significant reform. However, there needs to be a bigger rethink about the purpose of business rates, and whether this is still an appropriate way to tax companies, particularly smaller firms.

 

For many small businesses, particularly those in the high street or a village centre, the value of the building they work out of, often bears little relation to the income of the business itself. Also, business rates do not often reflect the value of trade that a company can do online, often from a very small workspace.
 

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