FSB’s East Anglia chair labels business rates “an unfair tax” on traders
An East Anglian business leader has labelled business rates an “unfair tax” as the government looks to hike prices for the first time in seven years.
The increases come at a time when sectors including hospitality and retail are facing higher costs from the national living wage and could be coupled with a crackdown on rate appeals, which has also attracted criticism from the business world.
Federation of Small Businesses (FSB) regional chair for East Anglia, Salena Dawson, said the increases would disproportionately affect businesses trading in “prime locations” – such as seaside town Southwold.
She said: “I have long believed that business rates are an unfair tax not based on the firm’s size or ability to pay. The recent reevaluation has made this situation worse for many small firms conducting business in prime locations.”
It comes as a number of business leaders have written to the government urging it to reconsider proposed changes to the appeals system, which would allow for a 15% “margin of error” in rate calculations.
Britain’s own “Queen of Shops” Mary Portas has also joined the fray, saying the increases could “cripple” independent retailers.
Earlier this week hospitality companies including Suffolk brewer and EDP/EADT Top 100 firm Greene King warned of the impact a rate hike could have on the industry.
Following an announcement by communities secretary Sajid Javid on Friday that thousands of businesses would see their rates fall under the new system, Labour has called for the government to undertake and publish full impact assessments of the proposed changes.
Shadow business secretary Rebecca Long-Bailey said firms were “fed up of the business rates rollercoaster” and needed “fairness and stability”.
After being approached by Southwold business owners, Ms Dawson wrote to 147 businesses about the potential impact of a rates increase.
While the majority will feel little impact, she said the “unfair nature of business rates” remains high on the local FSB agenda.
She said: “The impact of business rates is not going to go away and the right to appeal must be retained because for small businesses even an incorrect small percentage of rateable value can be the difference to sustainability in these increasingly challenging economic times.”
Andrew McTear, an insolvency specialist at charted accountants McTear Williams and Wood in Norwich, said for some businesses a rate increase could be a “tipping point” into collapse.
Combined with recent fluctuations in the exchange rate and the introduction of auto-enrolment pension schemes, rate hikes could create a “perfect storm” for struggling companies, he said.
Jackie Crisp, a surveyor at Roche in Norwich, said the retail sector was likely to be hardest hit.
“Businesses are going to get squeezed and if they have to pay more in statutory taxes they are going to make less profit. For the smaller traders it is going to have a direct effect on their income.”
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How will Norfolk’s towns be affected?
Business rates are calculated by taking the rateable value of a property, based on potential rent price, and combining it with a multiplier set by central government.
Roche Surveyors has analysed how the proposed changes to the system could affect Norfolk. It shows the majority of the county’s major towns are expected to see a fall in rates for town centre businesses.
In King’s Lynn High Street, it could drop from £870 to £500 and King Street in Great Yarmouth could see a fall from £650 to £470. Swaffham, Dereham, Thetford and Fakenham could also see their rates fall by up to 20%
However, on Southwold High Street the average rate could rise from £240 to £700, while in Burnham Market it is expected to double from £250 to £500.
The average rate for businesses in Gentleman’s Walk in Norwich and Holt Market Place are expected to remain stable at £1,600 and £350 respectively.