Friday, 22 August 2014

Reform of business rates:LabList article

 With Labour leaders increasingly getting criticism from its left wing for being a little too close to big business and the City, despite Miliband`s repeated claims to be against "predator capitalism", and offering tax breaks to all firms paying the living wage to their employees, perhaps it`s time for the Opposition to remember its leader`s promise? If Labour is to offer a real alternative to the other parties, clearly different from them as Miliband pledged, some radical ideas are essential, and there is clearly an opportunity opening in relation to the rates paid by businesses to the local councils? After all, what if the firm to be offered the tax break is actually well known for its avoidance of corporation tax?
     With business rates currently "calculated via a complicated formula", and leading industry figures "demanding sweeping reforms", it seems an ideal moment for Labour to suggest the introduction of different rates for different types of business. This could be utilised as a weapon in the war against "irresponsible" capitalism, with the 2015 Labour government legislating to allow councils to impose different bands of the tax, similar to the council tax system, but with councils working in cahoots with HMRC and the government. For example, rates could be lowered for the companies which pay both the correct amount of corporation tax to the Treasury, and the living wage, at least, to all of their employees.

     For the many businesses which refuse to pay either the living wage or their fair share of corporation tax, despite enjoying all the benefits tax brings to the local communities and to their employees, why not ensure the business rates they are forced to pay are sky-high? This could include the multi-nationals which claim exemption from most of the country`s taxes because they assert their businesses are not based here. If, as in Amazon`s case, the rates for massive warehouses went into the multi-millions, some justice, at least, could be seen to be done, in view of the fact that in the tax year 2013-14 it paid £4.2m in tax, despite UK sales reaching £4.3bn. But there are plenty of others to which the same principle can be applied, all reaping the benefits of this country`s security, transport and education services  but refusing to accept responsibility for their retention.
    Companies and individuals avoiding tax mean there is a tax gap of at least £35bn every year, and some tax experts like Richard Murphy, reckon it is much higher. With the NHS in dire need of extra resources, and some companies clearly intent on paying as little as possible to the Treasury, some drastic and radical measures are needed. Is not a change to the calculation of business rates worthy of discussion, especially as election manifestos are yet to be finalised?
  Business rate calculation could even include the nature of the business itself. Is there not a strong case to deter betting shops and payday lenders in their constant invasion of our high streets? In poorer districts, especially, a large increase in the business rate for such firms could act as a much needed hindrance to their expansion.
      Labour insists that whilst it is not anti-business, it does not support "business-as-usual", so perhaps a radical change to the setting of the business rate could be seen as a possible method of initiating a culture-change in the business sector?

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