A Group Of MPs Has Called On Business Rates To Be Reformed In Order To Boost Local Economies

A new report from the Business, Innovation and Skills Committee has claimed that business rates are not "fit for purpose".

The tax is a substantial cost for many small firms operating in the retail sector and is routinely identified as one of the main reasons some SMEs have moved away from physical premises into e-commerce.

While the money is sent to council coffers, ostensibly for reinvestment into the local economy, a number of businesses have claimed they are being damaged by the tax and are having to sacrifice growth in order to keep up with payments.

Because of this, the Business, Innovation and Skills Committee has pledged to come up with an alternative arrangement that will provide funding for local authorities while allowing SMEs to expand without excessive rates.

One of the ways the group of MPs is intending to change the system is to evaluate the use of retail taxes, which would be much lower for high street shops and inflict greater penalties on larger chains.

The British Retail Consortium, which represents UK retail companies and has campaigned for business rate change for a number of years, told the BBC: "This report must be the final nail in the coffin of the question: do business rates need to be reformed?

"They do. Business thinks so. A committee of Parliament thinks so. We very much hope the government will think so too."

Last year the government commissioned TV personality and retail guru Mary Portas to review the current state of Britain's high streets.

She recommended more money be put into the landscaping and management of a number of trial areas and has since called for more support for small businesses looking to establish premises in less well performing areas.

Parking was another big issue raised in the Portas Review and Ms Portas recommended parking charges be reduced, while the quality of municipal car parks should be improved to attract shoppers who may otherwise go to out-of-town outlets.

Expert Opinion

The debate surrounding business rates rumbles on and this is yet another indication of the need to ensure that small businesses are being supported to meet their potential. So many people believe they hold the key to driving improvements in the economy, but they will only be able to do this if they are given a helping hand along the way. <br/> <br/>“We have heard first-hand from clients about how issues such as business rates impact on them and many will welcome changes to the scheme which are not seen to penalise companies which are looking to develop offerings and ultimately expand. <br/> <br/>“It will be interesting to see how this issues develop and we would urge any small business with concerns regarding tax to seek specialist advice on the matter.” <br/> Steven Beahan - Partner