Business rates relocalisation opposition hots up. By Dan Martin

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Companies would be opposed to the power for setting business rates being given back to local authorities, an SME lobby group has urged.

According to the Federation of Small Businesses (FSB), companies are strongly against reports that Sir Michael Lyons, who is currently reviewing the funding of local government finance, will propose that councils be allowed to set business rates, a power they held until 1990.

Supporters of the change claim that taking business rates out of the hands of national government would raise extra money for local services and strengthen the link between local authorities and companies.

But the FSB said when councils previously held the power it led to wide discrepancies between different areas of the UK in terms of how much rates firms were forced to pay.

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30th Aug 2006 12:58

Only Half the Answer
It is right that business rates should be set at a more local level. Currently, many businessmen are probably unaware that, although the direct debit may go to the local council, that authority is simply acting as collecting agent for the Treasury, prior to the national redistribution of that money. So a business on one side of the street may only see half of its rates returned to its home borough/district, while across the road in the next council, their rates are effectively multiplied in their effect.

Locally determined business rates will lead to disparities, but how far do you want to take the principle of the level playing field? So what if a Council wants to kill its local economy with higher rates than the other lot over the border? The higher taxing authorities will suffer ... in an ideal world, that is.

But as Council tax has shown, even a locally set tax is of limited value in maintaining a link between the taxing authority and the taxpayers, so long as government continues to use the central government funding of local authorities to distort the system for its own means.

The risk is that local business rates would lose credibility, as has Council Tax, as they fall foul of the same financial shenanigans between local authorities and the Dept of Communities and Local Government (or whatever it's called this year).

Rant over.

Now, what about businesses, once locally taxed, having a vote ... anyone?

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