Government ‘not in a position’ to change high street tax

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The Government is “not in a position” to announce business rate reform next month’s Autumn Statement, according to Deloitte.

Bill Dodwell, head of tax policy at the Big Four accountancy firm, said research needs to be undertaken before “substantial changes” could take place.

It comes as the Confederation of British Industry (CBI) sets out its stall for the final economic statement before the General Election.

The industry lobby group called on Chancellor George Osborne to overhaul the “outdated business rates system” as part of the Coalition’s outgoing measures.

High street rates have put pressure on businesses after steep rises in recent years, adding to the difficulties of low consumer confidence.

The British Retail Consortium (BRC) has highlighted the business rates as affecting occupancy and a lack of investment in improvements.

Despite hopes from small businesses that next month’s statements could tackle the problem, Mr Dodwell said it is unlikely.

He said: “We don’t think the Government is yet in a position to make big substantial changes in this area.

“We would have preferred to have seen some sort of investigation into the best system for taxing retailers and property generally. We haven’t seen that work.”

While the BRC completed its own evaluation of around 50 options and suggested four alternatives in its Manifesto Milestones report in July, Mr Dodwell said no-one has found a “magical answer” to the problem.

He said: “We have to bear in mind that business rates raise about £27bn, a big, big amount of money.”

A major concern has been that business valuations “haven’t changed as rapidly as they should”.

Mr Dodwell said: “When you do get the benefit, it’s spread over the five years. It’s not a very well thought through process in terms of delivering relief.”

The CBI said the current business rates system is “a disincentive to company expansion”.

CBI director-general John Cridland said: “We want to see the Government encourage innovation and enterprise.”

Philip Lunn

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