FSB warns councils about tax rises

John Walker from the Federation of Small Businesses

John Walker

The Federation of Small Businesses (FSB) has welcomed the Government’s review looking at the way local authorities in England are financed, but warns that the new powers must not be used to raise revenue at the expense of business.

The FSB argues that it is also imperative that the funding local councils receive from central government is safeguarded so that all parts of the country can benefit from the new system.

The FSB is supportive of moves to create a system which incentivises councils to prioritise business growth, through being able to keep more of the business rates from firms in the region. If approached correctly this system would help to create better and stronger relationships between councils and local businesses, particularly if local authorities recognise that they will only succeed in stimulating growth with the help of businesses.

However, any changes must encourage councils to stimulate growth in a way which is sustainable; making small business growth the bedrock of the local economy, not just as a way to quickly raise revenues.

John Walker, national chairman, Federation of Small Businesses, said:

“Many businesses think that the rates they pay go straight to their local authority when in fact they go into a central pot and are then redistributed. While this consultation aims to make the process fairer and more transparent – in that a local authority will be able to keep more of the rates it collects – it must not be allowed to be used as a revenue raising exercise for councils at the expense of business. It is therefore imperative that business rates continue to be set centrally.

”Central government must also ensure that different types of relief – such as Small Business Rate Relief – remain fully funded, so that there is still a strong incentive to promote them locally.  Councils that increase the number of small businesses in their area and improve the take up of relief must not end up worse off as a result.”

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