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Government should ‘scrap’ double business rates hit

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The government must act to reduce the burden that planned increases in business rates are likely to impose on smaller firms.

The call has come from the Forum of Private Business (FPB).

With many firms already suffering the effects of the recession and spiralling costs, the FPB has warned of the impact that a 5 per cent rise in rates, set for April 2009, and new powers for local authorities to impose additional business rates under the Business Rates Supplements Bill will have on struggling enterprises.

The FPB wants to see the government scrap the 5 per cent rise in the small business multiplier that is used to calculate rates payments. The increase is, the FPB argued, above the rate of inflation and unrealistic in the current economic climate.

What’s more, the FPB added, the multiplier should be exempt from increases until at least 2010.

The government should also reconsider the introduction of supplementary business rates that will allow councils to levy an extra charge to pay for specific local infrastructural projects.

Phil Orford, the FPB’s chief executive, said: “Increases to rates charges and the spectre of supplementary business rates mean small businesses face another considerable cost burden at a time they can least afford it.

“This cannot be justified in an environment of falling sales, deflationary pressure and serious recessionary restrictions. It is particularly frustrating considering the rise in business rates has been calculated using old data, namely September 2008’s inflation rate figure of 5 per cent. By February 2009, inflation rates had fallen to 2.1 per cent.”

In addition, the FPB said that Small Business Rates Relief should apply automatically, amid concerns that fewer than half of eligible businesses in the UK actually receive the support.