Parties agree manifesto call to look again at tax on small firms

Earlier this month The Yorkshire Post published a manifesto for the region, setting out the main issues politicians must be able to answer before seeking votes in Yorkshire.

One of the biggest opportunities presented in the manifesto was the chance to make Yorkshire grow faster with a change to how business rates are collected.

Already the main political parties have pointed out how they are prepared to look again at the tax on shops and firms.

The first sign came just a day after the manifesto was launched when the Chancellor George Osbrone announced a review of the out of date rate.

And Labour has also backed reform. Last night shadow chancellor Ed Balls told The Yorkshire Post: “Labour’s better plan to help British businesses will help companies across Yorkshire grow and meet their fantastic potential.

“We will cut and then freeze business rates for small firms and take action to tackle late payments too.

“We will reform our banks and establish a British Investment Bank to help local SMEs get the finance they need to grow and create more good jobs.

“And we will ensure we have the most competitive rate of corporation tax in the G7 and protect jobs, investment and Yorkshire’s vital European funding by staying in a reformed European Union.”

In the manifesto this newspaper brought together the views of the region’s business community and the nation’s politicians when it warned that small firms often struggle with the burden of the property tax, especially when competing with online companies with smaller floor space.

In the manifesto we pointed out that the Business Select Committee had given a blunt but accurate assessment when it looked into the issue and sad that “business rates, in their current form, are not fit for purpose” .

The committee made clear there was a growing need to impress upon the Treasury and the Department for Communities and Local Government the importance of the retail sector as a driver of economic recovery. This is especially pertinent for small and medium-sized businesses.

In his Budget Mr Osborne said: “In my view the current system of Business Rates has not kept pace with the needs of a modern economy and changes to our town centres, and needs far-reaching reform.

“Businesses large and small have asked for a major review of this tax - and this week that’s what we’ve agreed to do.”

The Chancellor though stopped short of providing further details as to how the review will be carried out.

Instead, Liberal Democrat Danny Alexander launched the wide ranging review, saying that “now the time has come for a radical review of this important tax”.

He added: “We want to ensure the business rates system is fair, efficient and effective.”

Business rates are currently based on the property’s 2008 valuation, made before the recession had fully hit and when the cost of renting a shop or an office was often higher than now.

Rents across the north and elsewhere have fallen significantly since the financial collapse, but rates have not changed to reflect this.

The coalition Government has already increased business rates discount for smaller premises and capped the rise in the rate to two per cent.