The CBI is calling on the Government to put reform of business rates at the very heart of its Business Tax Roadmap for Budget 2016. According to the business group, the current system is “outdated” and “undermining manufacturers” by dragging down productivity levels.
The CBI argues strongly that the current system is based on a decades-old model, unresponsive to changes in economic conditions and is now becoming an increasing tax burden on firms. In the last seven years, in fact, tax revenue growth from business rates has far outpaced other taxes (up by 28%) and, indeed, the Government’s overall tax take.
A “distorted” business rates system means that there are powerful incentives to convert commercial property into residential – up 80% in 2014-2015 alone.