BCC attacks new business tax

The British Chambers of Commerce will today launch a last-ditch effort to secure new concessions for business from the Government on its plans to allow local authorities to levy a supplementary business rate.

The BCC, in tandem with other business organisations, has bitterly opposed the proposal for the extra business tax, and yesterday warned safeguards announced in the pre-Budget report did not go far enough.

The Government confirmed on Tuesday that it intended to allow local authorities to charge a supplementary business rate in order to fund one-off infrastructure and economic regeneration projects.

The Chancellor said business would not be unduly burdened by such charges because the levy would be capped at 2p in the pound and would not apply to premises with a rateable value of less than £50,000. Business will also be given a vote on the levy in instances where the private sector being asked to fund a third or more of a project.

However, the BCC will argue today that these measures are insufficient to protect businesses from local authorities eager to raise additional revenues. It is particularly concerned about the threshold at which a vote on schemes becomes compulsory. "There needs to be a vote for all these projects," the BCC's David Frost said. Mr Frost added that a tight settlement for local authorities in Tuesday's Comprehensive Spending Review would add to pressure on local councils to consider levying the new tax.

The British Retail Consortium also remains bitterly opposed to the supplementary business levy. Yesterday, the BRC warned that the £50,000 threshold would mean many very small businesses were caught by the tax, particularly in areas where property values are high. It also attacked the proposal that businesses would only get a vote in cases where they were asked for a third of the funding.

"Business is essentially being asked for taxation without representation, said Edmund Cook, of the BRC. "Local authorities may well deliberately pitch these projects so that business pays 30 per cent, say, in order to get them through without a vote."

The Crossrail initiative approved last week for London is the sort of project the Government considers suitable for a supplementary business rate, with the private sector contributing on the basis of the economic benefits it should generate. However, even in the case of Crossrail, the private sector will pay less than 33 per cent.

The Confederation of British Industry has been more sanguine about the supplementary business levy, but said yesterday that it remained concerned about the way the scheme would be introduced.