The government should replace the “broken” business rates system with a new model that maintains income for local authorities and supports pubs, finds a report by Parliament’s Treasury Select Committee.

The MPs said tweaking the current system through reliefs does little to address the negative aspects of the tax and “simply demonstrates how broken the system is.”

The report said that the government should examine different alternatives in time for the Spring Statement next year.

CAMRA has reiterated its call for a root and branch reform business rates to make it fit for a modern economy.

National chairman Nik Antona said: “Pubs pay 2.8% of the Business Rates bill but only account for 0.5 per cent of total business turnover. This is an overpayment of around £500 million by the sector each year.

“The report highlights that Business Rates do not fall upon all businesses equally and they place a far greater cost on bricks and mortar, than those that operate mainly online.

“The crucial role that pubs play as the social heart of many communities cannot be moved online.

British Beer and Pub Association public affairs director David Wilson said: “The Treasury Select Committee is absolutely right to support our call for reform of business rates. The current system is particularly unfair on pubs who pay 2.8 per cent of the entire business rates bill despite accounting for just 0.5 per cent of business turnover.

“The report also rightly highlights how the current system is a serious disincentive to investment, whereby people who put significant funds into improving their businesses are almost immediately punished with higher business rates.

“Business rates remain an unfair burden on pubs, this is especially acute when they are already being squeezed by other taxes such as unreasonably high beer duty. It is therefore imperative that the new Government treat this issue as a matter of urgency and reform the business rates system to help pubs and the communities they serve.”

In Northern Ireland an inquiry into high business rates here will be stalled by an election and continued lack of devolved government, DUP MP Sammy Wilson has said.

The MP, who was appealing to the chairman of the NI Affairs Committee to consider an inquiry into why business rates here remain consistently higher than elsewhere in the UK.

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