The current system is outdated and is undermining our high streets and manufacturers and makes investment in commercial property unattractive, which results in sub-standard premises and a drag on productivity.
The CBI argues that the current system is based on a decades-old model, unresponsive to changes in economic conditions and an increasing tax burden on firms. In the last seven years, tax revenue growth from business rates has far outpaced other taxes (up 28%) and 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 2014/15 alone. New commercial property developments in depressed areas, where property demand is lower and more price sensitive, have been made less viable because of business rates. The resulting lower quality, higher cost, commercial property starves high growth businesses from the premises they need to grow.