Government defends business rates system in response to Treasury Committee report

The government broadly dismissed recommendations made by the Treasury Select Committee following its inquiry on business rates.

In its official response, the government said the concerns raised in the Committe’s report will be dealt in an upcoming fundamental review of the rates system.

“The review will consider in detail many of the issues raised by the Committee and identify options to address those concerns,” the response states.

The government said “property taxes have several advantages over other forms of business taxation” and contended that the number of reliefs available can not be taken as evidence for a ‘broken’ tax system, as suggested in the report.

“Tax reliefs are introduced for many different reasons. While some may be intended to address concerns about the function of the tax system, they may also be used to provide support to certain sectors, or to incentivise particular behaviour,” the response reads.

The Committee has asked the government to examine alternatives to the business rates system which the committee described as “broken.”

The report said the increasingly complex web of reliefs does little to address the negative aspects of the tax. It also found the system “unfair” as it places a greater cost on high street shops and sectors like manufacturing than online businesses.

Responding to the government’s stand, the Association of Convenience Stores (ACS) said the delay in reforming the system will add to the woes of retailers.

“The Treasury Select Committee inquiry raised a lot of valid points about business rates not being fit for purpose, so if the Government is going to defer to the long awaited fundamental review then that needs to get started as soon as possible,” James Lowman, ACS chief executive, said.

“While we wait for this fundamental review, appeals still aren’t being dealt with, retailers are putting off investment plans, some businesses are paying business rates bills that are flagrantly unfair, and consumers are seeing their high streets suffer.”