Opposition to local business levy grows

The anti-supplementary rate lobby has, according to the Financial Timescontinued to grow since the government published its Modernising Local Government Finance green paper.

Yesterday, members of the Bristol Chamber of Commerce, the UK’s largest chamber of commerce organisation, suggested the body field candidates in the 2001 local elections to oppose the paper, if the government pursued the plan.

The green paper would allow local authorities to raise the business tax rate from 1% in year one to a maximum of 5% in year five.

Nigel Sherlock, the Bristol president said the act would ‘tip the scales’ in the case of certain marginal businesses.

The British Chamber of Commerce has estimated this supplementary proposal could cost businesses an additional £2.7bn in the next five years and £1bn each year thereafter.

The BCC believes local authorities should first win approval for their plans from the business community and only then be allowed to levy a supplementary rate. As the proposals stand, local authorities can decide to levy a rate, then seek agreement on how it should be spent. Should no agreement be reached, the extra revenues raised would enter the existing national business rate pool, over which business has no influence.

The new proposal is likely to undermine the working relationships that have developed between local authorities and their business communities, but they could also threaten local economic competitiveness in fragile business regions.

Adding weight to the lobby, The Institute of Directors has openly criticised the government’s proposal. In its reply to the government’s Green Paper, IoD deputy head of the Policy Unit, Richard Baron, called on the government not to hit businesses which already faced ‘a heavy tax burden’.


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