Business rates

The media have been running two popular causes in recent days. The campaigners want the government to spend more on social care. Campaigners also want no business rate rises in places where property prices have risen. This highlights the perpetual tension. How do you raise enough money for good purposes without overtaxing the people and businesses which generate so much of the national income?

Taxing work and enterprise is never a popular idea, nor helpful to promoting growth. It is a necessary evil as the country wants to have decent public services. The skill is how do you raise enough from those who earn the money without doing too much damage to enterprise?

The decision to  tax business property is commonplace around the world. The political difficulty in the UK comes from the need for periodic revaluations of properties. In the areas where these have risen a lot businesses face large increases in rates bills. In the areas where values have gone down other businesses benefit but are not so vocal about the changes.

Is this a good system for taxing  business? If you did not raise business rates, how would you replace the revenue?

I favour setting income and profits  tax rates that people and business will pay and can pay, to avoid too much damage to incentives and to keep business and enterprise at home.  I have no problem with the principle of business rates but would be interested in comments on the current levels.

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83 Comments

  1. Caterpillar
    Posted February 19, 2017 at 6:19 am | Permalink

    Businesses – net cash flow tax
    Individuals – consumption tax

    How to transition? No idea.

    • Lifelogic
      Posted February 19, 2017 at 11:14 am | Permalink

      No real point in taxing businesses at all (until they distribute to shareholders or pay wages). If they retain profits and reinvest this it is far better for the economy and jobs. Giving it to government, who will nearly always waste most of it anyway is not a good plan.

      Government has not got a clue what investment means – look at HS2 and Hinkley C and all the green crap grants.

    • nhsgp
      Posted February 19, 2017 at 12:41 pm | Permalink

      Net cash flow = profits – corporation tax
      Consumption tax = VAT.

  2. Mark B
    Posted February 19, 2017 at 7:32 am | Permalink

    Good morning.

    How do you raise enough money for good purposes without overtaxing the people and businesses which generate so much of the national income?

    When in a hole it is wise to stop digging.

    The government and State decided long ago to get into the Social Care Business. This was done way back with, David Lloyd George’s, “People’s Budget.”

    The problem as I see it, is that government has its grubby fingers in too many pies and, thanks to our Left Wing media, is badgered into spending evermore.

    I would like to ask the question, where did all the monies the government collected via NI go ? If that money was reinvested much like a pension fund would have done, perhaps we would not be in the mess we are in. Plus, had governments behaved more prudently with our monies then we would not be in such debt and would not have to pay back large sums which could have been used elsewhere.

    Reply NI is pay as you go. It is all spent as collected.

    • David Murfin
      Posted February 19, 2017 at 8:52 am | Permalink

      NI is all spent as collected.
      It is thus a tax.
      That is surely Mark B’s point.
      “Insurance” premiums are not so spent. They are accumulated until time of need, .
      with payments to those soon in need from monies available because premiums are set at a level to cover the assessed chance of that happening. If insurance companies spent all they collected, they would soon go out of business.
      Perhaps, where the government is involved in a business (the health service is clearly a business, as the NHS has private competitors) it should behave in a business-like way. I suppose that would count as ‘privatisation’ even if any ‘profit’ was ploughed back at once in research. Compulsory insurance works for motoring third party claims. Perhaps compulsory health insurance (with higher premiums for smokers, I suppose) might concentrate people’s minds on staying healthy, and (as not part of general taxation) take the NHS out of party politics.
      But as Caterpillar says, “How to get there now?”

      • Mark
        Posted February 19, 2017 at 8:50 pm | Permalink

        Rationally, premiums should be lower for smokers. Their lifetime health care costs are below average because they tend to die younger, rather than surviving into old age with expensive to treat conditions. Here’s the conclusions of one of a number of studies into this (this one from Finland):

        Smoking was associated with a greater mean annual healthcare cost of €1600 per living individual during follow-up. However, due to a shorter lifespan of 8.6 years, smokers’ mean total healthcare costs during the entire study period were actually €4700 lower than for non-smokers. For the same reason, each smoker missed 7.3 years (€126 850) of pension. Overall, smokers’ average net contribution to the public finance balance was €133 800 greater per individual compared with non-smokers.

      • Mark
        Posted February 20, 2017 at 1:40 am | Permalink

        No takers for a Land Value Tax? Business rates are clearly an inappropriate way to proceed. Local tax on businesses should reflect the call they make on local services and infrastructure for their employees and customers. A simple proxy is to use a sales tax on turnover and staff numbers.

      • a-tracy
        Posted February 20, 2017 at 9:17 am | Permalink

        Are you sure smokers are the biggest cost to the NHS? What about sports people, motorbike riders, where do you stop with this? Plus smokers pay extra taxes on their bad habit which should be invested directly into the NHS. I’ve never smoked a day in my life nor my husband but I think this is a slippery slope.

    • Lifelogic
      Posted February 19, 2017 at 11:16 am | Permalink

      National Insurance is just another damaging tax with a name designed to deceive.

    • eeyore
      Posted February 19, 2017 at 12:01 pm | Permalink

      “The great secret about the National Insurance Fund is that there ain’t no fund.” – Nye Bevan.

      Isn’t state funding of social care a good example of mission creep? The problem with making government bigger is that it’s next to impossible to make it smaller again. I rather think that’s the best reason not to make it bigger in the first place.

      Beveridge certainly didn’t have in mind that the State should fund social care for the elderly. He was very aware of the moral hazard of weakening people’s sense of personal responsibility. O si sic omnes!

      • Lifelogic
        Posted February 19, 2017 at 9:59 pm | Permalink

        It is not at all impossible to make the state smaller. This as much of it does nothing of any use, and much does positive damage. No one would even notice if half of it went and the country would benefit hugely. Alas there is no political will. May and Hammond are essentially just tax borrow and piss down the drain interventionist, bloated state, socialists – following on from Cameron, Osborne, Major, Bliar, Brown, Heath, Wilson, even Thatcher to a large degree.

    • libertarian
      Posted February 19, 2017 at 12:21 pm | Permalink

      In rely to JR

      So it was a lie to call it National INSURANCE then? Insurance premiums are normally ring fenced and invested to pay out later. Not spent as soon as you get them as you then have no money to pay out the claimants which surprise surprise is the position we find ourselves in now.

      • Lifelogic
        Posted February 20, 2017 at 7:17 pm | Permalink

        Of course it was. Just as employment and wage control laws damage workers chances of an alternative job opportunities and the NHS virtual monopoly kills competition (and patients) and damages health care, equality legislation causes more harm than good and OTT building regs and planning controls mean people cannot afford houses ……

    • nhsgp
      Posted February 19, 2017 at 12:40 pm | Permalink

      Reply NI is pay as you go. It is all spent as collected.
      =============

      Correct.

      Now for the real question. No assets in the system. Does that mean that the NI system doesn’t owe people a pension? Clearly the answer is No. People are owed a pension.

      So since people are owed, the obvious question is how much does the state owe? Ah that’s a secret.

      Since its a secret, you get the left saying look we can borrow and spend more. Hiding the debt is at the root cause of why the UK is in a mess.

      You then get the two types of austerity. Public austerity where state spending is cut, and private austerity where you take home less because the state has had its hand in your income first.

    • Mark B
      Posted February 19, 2017 at 6:33 pm | Permalink

      Thank you Mr.Redwood MP sir. Your last sentence highlights the problem beautifully.

      Too many governments of all hues just spend, spend, spend and do not think of tomorrow. Or at least until the next election. They leave the mess, and it is usually the Labour Party, for others to clear up. eg Lady Thatcher.

      As Welsh Secretary I am fully aware that you once gave back monies to the Treasury that you did not spend. Oh for a few more like you.

    • zorro
      Posted February 19, 2017 at 7:40 pm | Permalink

      As John says, National Insurance is and effectively always has been an extra tax spent as collected and not invested. I suspect that this model isn’t the best one nowadays and does not drive virtuous incentives in the behaviour of people and the allocation of resources…..

      zorro

  3. alan jutson
    Posted February 19, 2017 at 8:01 am | Permalink

    The problem seems to be that the so called re-valuation was sold as cost neutral by the Politicians, and so does not raise any real extra income in the form of tax, it just divides it up differently, with seemingly massive rises in taxation on many small businesses and those with a so called high property value, and some relief on very much larger concerns which have lower value premises (large warehouses out of town).

    In my view the whole rateable, community charge, council tax system based on property values is wrong anyway, as it has no relationship to services used.

    The Poll tax was a far, far fairer system (certainly for residential properties), where each individual paid the same amount for common services available.
    Sadly this was again miss sold to the public, hence the massive demonstrations against it by those who would pay it for the first time.

    Vat is the fairest tax on business, as it should create a level playing field for all businesses (if they are properly registered)
    So why not lower business rates, or do away with them completely, and raise VAT across the board, with present exemptions on food etc.

    Thus businesses save on start up, running costs, and overheads, so prices should not increase if a revenue neutral plan is put in place.

    You already have a business rate tax income from corporation tax on profits, so if profits rise for those businesses, then so will tax take.

    It would help a little if the Government did not waste as much money on itself and its own pet vanity projects.

    Oh and scrap foreign aid, the great UK public are very, very generous when it comes to helping out when natural disasters occur etc.

    • Man of Kent
      Posted February 19, 2017 at 12:31 pm | Permalink

      AJ , agreed . Your points are are all good .

      On a local level I have chatted to a number of shop owners in our High Street – the consensus seems to be that for those old and well-established businesses who have paid off their mortgages then they can keep going pretty well .

      For new businesses paying for a mortgage / leasehold and business rates then life is very difficult .
      Like most High Streets we suffer from many closed shops and ever more charity shops [not paying full business rates ] that include new items in their stock .

      I agree chop business rates ; however the problem is much bigger than just shops .
      Our parish council must pay business rates for its car parks and NHS for its hospitals . The tax is pervasive and reflects in local tax bills and higher charges in goods and services.

      It really comes down to Government showing the way and stop wasting money on vanity projects . They set a bad example- so that our local parish council and town council each have such projects underway for a total of over £100 million .

      An unnecessary imposition on us all.

      • A.Sedgwick
        Posted February 20, 2017 at 9:07 am | Permalink

        “our local parish council and town council” gives a clue to the overall problem -too many councils. No doubt Kent has a county council as well. We are massively over governed, the EU is just part of the problem. Devolution has increased this growth e.g. why does Wales and Scotland for that matter need any? Do their population numbers justify the expense and bureaucracy?

    • Big John
      Posted February 19, 2017 at 4:56 pm | Permalink

      Businesses don”t pay VAT, the consumer pays, the business passes it on to the government.

      • alan jutson
        Posted February 19, 2017 at 5:47 pm | Permalink

        Big John

        “Business do not pay VAT”

        Afraid they do, on the goods they purchase from their suppliers, or at least I did when I ran my business before I retired.
        It is charged all the way up the supply chain with a set off on your monthly/quaterly returns to HMRC when you deduct what VAT you have paid, from what VAT you have received.

        The end user (Customer) is the one that pays VAT but with no set off allowance.

        The fact that the business passes VAT onto the government underlines my point of a way of raising increased funds/taxes.

        If the government want it to be finance neutral then the new increased VAT rate difference will only give it an amount extra, which would be a substitute for the Business rate loss.

        Thus the Government has the same income but from different tax formula.

    • NickC
      Posted February 19, 2017 at 9:14 pm | Permalink

      Alan Jutson said: “It would help a little if the Government did not waste as much money on itself and [on] its own pet vanity projects.”

      True. If the profligacy and waste I witnessed on a defence related job is anything to go by, the government has ample money to fulfill its promises. Similar waste seems endemic in the NHS too, as my acquaintance has explained. I have no doubt that local government doesn’t escape the 50p to the pound trap either.

      That certainly doesn’t mean “better” management is needed. Managerialism appears to be the main culprit.

    • A.Sedgwick
      Posted February 20, 2017 at 9:12 am | Permalink

      Increasing VAT to scrap BR and CT is a good short term answer. Once out of the EU VAT should be replaced by a local sales tax to allow local government to be self financed. Would the Treasury give up this control or is this a step to far in democracy and sovereignty of the people?

      • A.Sedgwick
        Posted February 20, 2017 at 9:12 am | Permalink

        for to read too

  4. Cheshire Girl
    Posted February 19, 2017 at 8:45 am | Permalink

    Alan J.

    I would’nt approve of an increase in VAT. I think it is too high as it is now. I wouldn’t mind so much if it was only on things that could be construed as ‘luxuries’ . However, it is on Services as well. If you have a Plumber in to fix your leaking tap, VAT is applicable. If you have scrimped a bit to afford a couple if days in a ‘budget’ hotel, VAT is on that as well. In fact VAT is on pretty much everything you do or buy. It is an easy way to raise lots of money quickly, so the Politicians have been quick to take advantage of it.

    I agree with your last sentence, but unfortunately I believe that it is never going to happen. Personally, I am fed up with people signalling their virtue with my money. Money that could be better spent elsewhere!

    • alan jutson
      Posted February 20, 2017 at 8:17 am | Permalink

      Cheshire Girl

      I agree, I would like Vat to eventually be reduced as well, but John asked a simple question for alternative ways of raising funds without putting up business rates, I simply offered a solution.

      Afraid the truth is the government want to raise more money in taxation because they are spending more and more, and so the suggestion that this re rating will be finance neutral is simply yet another misleading statement.

      If business rates were abolished completely then a larger firm of plumbers (to take your example) would be able to compete on a more level playing field with the single self employed plumber who works from home, who has the advantage of not paying business rate costs.

      The real and proper solution to lower taxes, is for the Government to spend rather less in the first place, and to get value for money when it does spend it.

  5. Ex-expat Colin
    Posted February 19, 2017 at 8:51 am | Permalink

    We see that NS&I continually lower the return (p.bond prizes) for punters. So where does the larger remaining interest go. Is it into the swamp + friends? Same really with the various cons called “lottery”.

    Seems I’m paying £105 pa to National Debt interest and is something I and my family had no hand in. Terrible place!

    Its on this topic where I watch Trump closely…spending avalanches and quick. Try it sometime….very soon please.

  6. sm
    Posted February 19, 2017 at 9:08 am | Permalink

    Business should pay a local tax, via local rates, for the services they benefit from (roads, police, lighting, sewage etc).

    Then scrap the whole damn system of business rates (reducing bureaucracy for both the tax-gatherers and the taxed), and simply increase the tax on profits to compensate.

    I want those who govern us to be creative about SIMPLIFYING the tax system, not making it ever yet more complex and unfair.

  7. Dave Andrews
    Posted February 19, 2017 at 9:19 am | Permalink

    The current tax system is a dis-incentive to entrepreneurship.
    Faced with the obstacles of business rates, employment law, employment taxes, the individual is persuaded to stay small in their enterprise.
    It’s as if the government was committed to stifle business and discourage ambition, as if it was a social evil like smoking and alcoholism.
    A business doesn’t object to paying for the services it needs, however when it comes to business rates, businesses see themselves as a cash-cow for the infinite local demands of a socialist agenda.

  8. William Long
    Posted February 19, 2017 at 9:33 am | Permalink

    Rates whether Business or Domestic were originally conceived as away to pay for services from the local authority. They have now more or less changed into a property tax and like all taxes on assets that do not directly produce income to pay the tax, this makes them unpopular.
    Business Rates seem to pose a particular problem because they are not just a tax on the ownership of property, but because many business premises are rented they are a tax on the occupation of property which seems absurd. Because smaller businesses are even more likely to be tenants rather than owner of their premises, they tend to be hit hardest. Add to this the lack of a directly linked entitlement to a vote, making the spenders of the tax revenue unaccountable and it is easy to see why no-one likes business rates. The Government has made things worse by persistently delaying revaluation so when it comes it is disproportionately dramatic.
    Businesses should clearly pay their share of local authority costs but I think businesses should be taxed on their profits whether this is to pay local or national taxes.

    • Leslie Singleton
      Posted February 20, 2017 at 3:53 am | Permalink

      Dear William–Businesses paying their share of costs would be more acceptable if businesses were paid for the enormous amount of work and time they are forced to do or put in working gratis for the Government–PAYE and VAT collection, equal rights including anti-genderism, maternity leave, national and other holidays, minimum wage, workplace pensions, workers’ rights in general, necessarily becoming legal experts to cope etc etc. Just think how many more start ups, not to mention fewer bankruptcies, there would be (= more jobs) without all this stuff, which truly has nothing to do with running a business.

  9. Sir Joe Soap
    Posted February 19, 2017 at 9:50 am | Permalink

    The basic problems with business rates are twofold:

    1 As a tax on space, it is a tax on employing people, machines and inventory, each of which take up space. It is therefore biasing the UK business profile against businesses which intensively use these. An online service business will be favoured to the detriment of a manufacturing or retail business.

    2 It’s a tax which is payable regardless of profits made. It therefore clobbers startups and expanding businesses, as well as those in a temporary or permanent state of lower profitability.

    My solution is to take account of the hundreds of thousands of based-at-home workers for large service companies, where neither the large corporate (which saves on office space as well as business rates) nor the worker themselves make any contribution to a property-related business tax.

  10. Wessexboy
    Posted February 19, 2017 at 10:01 am | Permalink

    Absolutely agree with Alan Jutson on all points.

  11. Bert Young
    Posted February 19, 2017 at 10:29 am | Permalink

    Nearby places like Wallingford are already suffering from empty shops ; the volume of business and their profits do not warrant their existence . On the other hand Supermarkets in Didcot ( a few more miles away ) are booming . I hate to see the decline of small market towns and question whether the impact of the proposed increase in taxes will be of any benefit .

    Taxes on profits are a much more effective way to go ; certainly Amazon and other technology inspired operations should not receive extra benefit . Whenever taxes are reduced the revenue take increases , so , if the Hammond motive is to receive more , why doesn’t he chose this approach ?. Norman Tebbit is right , there must be a top to tail revue of the business tax system to put fairness in place .

  12. flight
    Posted February 19, 2017 at 10:31 am | Permalink

    Yes there are lots of pix in local press of sad shopkeepers holding signs detailing enormous rate rises. Many shops going bust and no longer able to sell their wares ( which can be bought online for a fraction of the price and delivered locally for free ).

  13. graham1946
    Posted February 19, 2017 at 10:55 am | Permalink

    Property taxes are always wrong, and the fact that they occur in many countries is irrelevant – just an indication of the paucity of thinking among politicians who cannot come up with anything original. They take no account of ability to pay, either business or private individuals. An oligarchs home probably pays just a few more pounds than mine. Similar in business, large stores are capped, small ones are not.

    There should be either a turnover tax or a profits tax and all should be made to pay, whether in bricks and mortar premises or no premises, tax dodging internationals, internet or not. If you trade in this country, pay tax in this country or get out.

    VAT could be increased, but this tax itself is wrong headed and needs reform. If all businesses were made to pay, with no exemptions or complicated returns to make, it could be much lower. For instance, a window cleaner (yes I know it’s an over simplification) with a bucket and a ladder could live royally on a turnover below the threshold, whereas a retailer, purely because he has to carry a lot of stock cannot make a living even on twice the threshold and must make returns so complicated it makes your head spin. For example say, pet shops, where rabbit food bought and sold in 20 kilo bags are exempt, but split it into say 5 kilo bags and it is VAT rated – crazy. All has to be accounted for.

    A new, low tax which is unavoidable is the answer with everyone paying and no big government admin to complicate it or tax accountants to avoid it.

  14. rose
    Posted February 19, 2017 at 11:28 am | Permalink

    I should like to know how much councils are spending on keeping asylum seekers in hotels and B and Bs; how much on “child refugees”; and how much on housing asylum seekers in other ways. Then I could get some perspective on the questions you ask. From what ministers are saying it sounds as if these costs are only going up.

  15. Antisthenes
    Posted February 19, 2017 at 11:41 am | Permalink

    Welfare like most political initiatives sprung out of good intentions and like most good intentions cause as many if not more problems than they solve. It could be said that is a price worth paying because so many benefit who would not otherwise if state welfare or other state initiatives did not exist. However there always comes a point when the price becomes so great that the initiative becomes unsustainable and the problems associated with it becomes intractable.

    That is the point we have reached today in not just welfare but all the government processes. It has forced the reduction in welfare and even the need to leave the EU. It will force more and hopefully a complete rethink of how welfare and other initiatives are provided and funded. Taxes and the drain on productive resources cannot forever be increased.

    The cultural consequences of entitlement and dependency that these initiatives have fostered are seriously damaging the fabric of society. It is stifling enterprise and robbing the populace of individuality and the capacity to think objectively. It is encouraging a herd mentality.

  16. Duncan
    Posted February 19, 2017 at 11:58 am | Permalink

    How easy it is for the State simply to raise their revenues using the threat of criminal prosecution rather than cut state spending. The private sector today is nothing more than the State’s wallet. It’s even more shameful that the government of the day is a conservative one.

    I know of no one who believes that state involvement is unnecessary but that involvement should be fiscally sustainable and proportionate. It is becoming increasingly evident that even the conservatives have capitulated to the left’s narrative that more is better and that less is evil and morally reprehensible. That suggests the tipping point has been reached and that moving forward the State’s determination to extract what it needs from the private sector will only become more aggressive

    As ever, cowardly politicians when in govt. haven’t got the courage to confront the various vested interests that now infect the State’s activities for fear of negative media headlines. It is utterly pathetic

    ‘Society’ is far stronger when each individual works towards self-reliance rather than looking towards state succour

  17. agricola
    Posted February 19, 2017 at 11:58 am | Permalink

    Question, “How do you raise enough money for good purposes”. Answer, by ceasing to raise it and spend it on bad causes. Example, we spend at least £10 Billion PA on the EU which disappears into un-audited accounts of the EU. Further example, we spend £10 Billion plus PA on overseas aid. Spend most of it at home. Additionally we subsidise inefficient so called green energy when energy from other sources is available at half the price.

    I agree, minimise the evil of taxation. It has given birth to a whole industry geared to avoiding it, and is generally speaking counter productive. The whole system needs to be looked at in depth. What is government doing that it should not be doing. Tell me of anything it has a hand in that is efficient and productive. Government is genetically incompetent. Having decided what government can do, then tax at levels that do not destroy the source. For the next ten years our national commercial activity requires the maximum encouragement. No organisation contemplating it, should through levels of taxation, be thinking it would be more sensible to incorporate elsewhere.

  18. libertarian
    Posted February 19, 2017 at 12:17 pm | Permalink

    Heres an idea John

    Rather than try to put more of us out of business with exorbitant taxation and overheads

    In the last two years we’ve had

    Shared Parental leave

    Flexible working

    Holiday pay on overtime ruling

    VAT MOSS

    Business Improvement District levies

    Workplace pensions

    Increased national minimum wage

    HMRC crackdown on self employment

    Massive hike in Business rates

    YET we get less and less back from the public sector

    How about being more prudent about how you actually spend the money, how about not wasting billions of pounds, how about spending the taxes raised on core services only

    We do NOT need a ministry of culture media and sport , we do NOT need a ministry of Business, We do NOT need a Northern Ireland Office, we do NOT need Office of Advocate General for Scotland, we do NOT need a Scotland Office. We do not need Academy for Social Justice Commissioning, We do NOT need one whole layer of local government so instead of the current 6 layers of government we can get rid of at least two ( EU and one local layer) and a further 367 Advisory bodies, all of which are unnecessary

    This would save enough money to scrap business rates all together AND to improve core services .

    Small businesses are the future , the tories are killing us. Bonfire of red tape and regulatory burden my arse

    • turboterrier
      Posted February 19, 2017 at 11:11 pm | Permalink

      @ libertarian

      So well said. You left off the biggest elephant all the money paid out in subsidies, constraint payments for all this green crap forced upon us.

      When is this government going to have the bottle to repeal the Climate Change Act?

    • a-tracy
      Posted February 20, 2017 at 9:57 am | Permalink

      You missed this one major cost of SSP and Sickness Holiday Pay.
      Abolition of sick pay compensation forces small firms out of business http://www.telegraph.co.uk/finance/businessclub/people/11308963/Sick-staff-drive-micro-firms-out-of-business.html

      We were asked to agree to flexible working which often means full-time jobs going part time then we get blasted for creating part-time jobs??? for the other half of the original full-time position.

      Business gets slated for zero hours contracts but those positions are PAYE, we collect and pay any taxes monthly (and NI that accrue), we pay holiday pay on them and the worker can get other jobs. The only zero hours workers I have are those over retirement age who want to just work times and days that suit them and cover holidays and short notice sickness to boost their pensions.

      • libertarian
        Posted February 20, 2017 at 10:39 pm | Permalink

        a_tracy

        Absolutely. You are right

  19. Pragmatist
    Posted February 19, 2017 at 12:24 pm | Permalink

    It is surprising how many High Street businesses are not in fact individual entrepreneurships at all. So too with pubs, restaurants even fish and chip shops. We should not be conned when the media presents a “struggling” business owner. The manager or franchisee always presents himself as “just coping”. You’re hardly likely to go buy his stuff if he brags about making mega-bucks out of you and still has enough profit left to send the main owner his proportion of profit.
    # Footnote. Business people, top of the agenda= making money, not providing jobs and doing ones fellow man a good turn.

    • libertarian
      Posted February 20, 2017 at 10:07 am | Permalink

      Pragmatist

      You are poorly named, you are talking complete cobblers

      1) Business rates apply to all businesses not just High Streets

      2) of the 5.6 million UK businesses 4.1 million are sole traders

      3) 99% of all businesses are small businesses

      Small businesses have created just over 2 million new jobs in the last 3 years

      Oh and I dont know why I bother , but without profits ( please go and find out what that means first before posting nonsense) there is no corporation tax, no money to fund wage increases, no money to invest in growing the business, no money to hire more people.

  20. Cliff. Wokingham.
    Posted February 19, 2017 at 12:32 pm | Permalink

    RG40

    Alan,
    I have some sympathy for what you suggest however, the best idea, in my opinion, would be for us to have a grown up debate as to just what we want the state to do for us. As Mark observed above: The state has it’s fingers in too many pies. I would go further and suggest the state is acting like an old Chicago or East End Gangster wanting it’s cut in all the action!

    What do we want the state to do for us?
    Education? Health care? Social Care? Security? Policing? Do we really need constant patronising messages from the state about how much we eat or drink or what to do if we get the sniffles? Which services could we provide for ourselves cheaper and of a better quality if the state got out of the way and let us keep more of our own money?

    The problem is that A) We have very few true Conservatives in the party and B) The media would not allow us to have such a debate.

    • alan jutson
      Posted February 20, 2017 at 8:32 am | Permalink

      Cliff

      I agree absolutely a cross party grown up debate would be nice, problem is, where do you find the sensible grown up’s who will dump party dogma, and who will vote with common sense and without whipping.

      For a recent example, just look at the fiasco over the EU and some of the arguments and absolutely crass comments put forward by some MP’s.

      Such a shame.

      • Cliff. Wokingham.
        Posted February 20, 2017 at 4:33 pm | Permalink

        Indeed Alan,
        Perhaps we get the government which we deserve as a nation, given most people’s disinterest in politics, economics etc and their obsession with celebrity etc. which is little more than Bubble gum for the mind.

  21. nhsgp
    Posted February 19, 2017 at 12:37 pm | Permalink

    If you did not raise business rates, how would you replace the revenue?
    ===============

    Big assumption that you have to replace the revenue.

    Just don’t tax. The state is the problem, not the solution.

    Now ask the question why John wants to replace the revenue?

    it’s because 30% of taxes go on the debts, and the debts are rocketing. It’s the out of control debts that are the cause.

    10 trillion pounds of pension debts for starters.

  22. Iain Gill
    Posted February 19, 2017 at 12:56 pm | Permalink

    Certainly the way supposed charity shops are allowed to operate rate free is putting ordinary decent business out of business. Many of these charities have staff and execs on large pay packets and they don’t feel like charities the way they operate.

    Also the way a lot of big multinationals avoid tax is outrageous, as is the way they can bring in cheaper foreign workers who also get taxed less than locals in the current system

  23. Tad Davison
    Posted February 19, 2017 at 1:02 pm | Permalink

    Some causes are worth the money – the sick, the disabled, the young. Others are far less deserving – the criminal element who prey upon others for their own selfish gratification.

    We’ve had the usual tired old penal reformers on the telly this morning essentially telling us how we can solve the problem of crime and re-offending if only we spent vast amounts of money on prisoner’s comfort. But that money has to come from somewhere. There is no magic money tree.

    I am of the view, that given the right circumstances, criminals could be incentivised to want to go straight, and it wouldn’t cost any more than it does now. But rather than make things easier for prisoners, we need to go in the opposite direction completely.

    And once they had been driven down and broken, and finally come to appreciate the meaning of respect and responsibility, other would-be scumbags would know with certainty what was likely to happen to them if they too went down the path of criminality.

    The rest of us could then find this world would be a whole lot more decent a place to live in, and that the precious largess generated by our hard-pressed businesses could be redirected to those who deserve it most.

    Tad Davison

    Cambridge

    • Iain Gill
      Posted February 20, 2017 at 8:00 pm | Permalink

      yea but we have people in prison for no more than failure to pay their tv licence

      a complete waste of everybodys time

      in fact they would have got less sentence for beating a policeman up

      so there is some merit in looking again at our mess of a so called justice system

      • Tad Davison
        Posted February 21, 2017 at 11:36 pm | Permalink

        I’m a fair-mined man Iain, and I’m always open to a fair point well made.

        If I had my way, there would be no licence fee, or at least, the BBC would be forced to be impartial for the money people are forced to pay for its upkeep. Not sure how best to compel people to pay for a Stalinesque way of financing an institution though, as such a thing goes against my instincts.

        There are also people in prison who are mentally ill, who should be elsewhere in a secure institution if found to be criminally insane.

        Then there are the bulk of the rest. The arrogant scumbags who need to be controlled at the business end of an M16 to get their attention and compliance. Criminality is something we can no longer afford, but this trash will continue to offend so long as there isn’t some means to stop them, and politicians have consistently failed to protect the public through tying their own hands behind their backs with a ridiculous adherence to political correctness and human rights.

        Tad

  24. John Probert
    Posted February 19, 2017 at 1:38 pm | Permalink

    I think your probably correct businesses that own property in the SE have seen substantial
    increases in the value of their assets. Therefore it would be reasonable to raise tax income for the exchequer in a balanced way to continue investing in our country.
    As you say John not popular but necessary.

  25. A.Sedgwick
    Posted February 19, 2017 at 1:42 pm | Permalink

    Unfair BR and CT should be replaced by a local sales tax, which could make local government self funding, more businesslike, smaller and leaner by reducing number of councils.

    Off topic, anti Brexit Broadcasting Corporation much in evidence with Marr – matey with Mandelson and tough and tedious with Truss.

    • benjamin weenen
      Posted February 20, 2017 at 8:22 pm | Permalink

      Yep that’s a great idea. Also the prices of goods and services should be set by the levels of people’s income and capital too. After all, why should only taxes penalise success?

  26. Ian Wragg
    Posted February 19, 2017 at 2:37 pm | Permalink

    My wifes shop has had a 15% rise in business rates. Annual turnover is down about 6% and refuse collection is up 5%.
    As there has been no increase in profitability over the past 4 years it looks like the shop will be closing.
    The landlord insists on raising rents when 2 adjacent shops have closed and remain empty.
    There is no point in running a small business these days as we earn way below the minimum wage.

  27. Jack
    Posted February 19, 2017 at 2:49 pm | Permalink

    UK government literally creates the money supply out of thin air by spending. It has no need for tax revenue. Taxes are simply an anti-inflationary anchor for the currency.

    We’ll never solve the problems of humanity if we continue to mistakenly believe that sovereign governments with floating exchange rate currencies have to tax in order to spend.

    We need to think in terms of real resource constraints, not financial constraints that do not exist.

  28. ian
    Posted February 19, 2017 at 3:40 pm | Permalink

    What i mean is printing credit out of fin air by institution that have no money and are worthless because of low interest rates while you continue to bail them out, how banks earn there money, lend money for rent and when opportunity a rises, for close on the debt when the applicant is in trouble and sell on later for big profit, happen all the time in the 50, 60 and 70, then in the 90s, 2000, 2008 and now 2018 and goes on in small way between correction as they call them, then parliament re capitalize the banks with public money after they have just stolen a lot of money off the public by for closing on their businesses and houses. As you know as banker yourself.

  29. Roy Grainger
    Posted February 19, 2017 at 3:41 pm | Permalink

    Any tax or rate based on assessed property values is going to be complex and expensive to administer – tax based on income (people) or revenue (businesses) instead. Taxing businesses on profit opens up too many avenues for avoidance – revenue-based taxes like VAT are better.

  30. English Pensioner
    Posted February 19, 2017 at 3:59 pm | Permalink

    Surely a more important question is whether the traditional High Street will still exist in a few years time; indeed will any smaller shops continue to exist or will the supermarkets dominate to such an extent that it is impossible to make sufficient profit from a small shop. The high end shops such as the jewellers and top of the range dress shops seem to be managing, but the branch of a national bakery chain closed last year and the local branch of a well know news agents seems to be struggling. The only time I now have cause to walk down the local High Street is to visit my bank, but at the present rate of branch closures, I can’t imagine that it will still be there in a few years time. Charity shops and Coffee shops seem to be on the increase but will they still attract custom if the other shops go?
    I just wonder as to how much longer our councils will be able to rely on town shops (and the associated car parks) as a source of revenue.

    • turboterrier
      Posted February 19, 2017 at 11:25 pm | Permalink

      @ English Pensioner

      Surely a more important question is whether the traditional High Street will still exist in a few years time

      No it wont be there just rows of empty shops.

      Time for the councils to introduce change of use and allow the shops to be turned into living accommodation, its not as if it is not needed. Housing would at least bring in some revenue.

  31. Doctor in the House?
    Posted February 19, 2017 at 4:51 pm | Permalink

    One or two MPs, not JR, are going through a mental hell.
    In the 2008 financial crash persons involved in the finance industry in face-to-face customer interactions as well as in supervisory and management roles of the said persons suffered severe bouts of stress. Some bouts resulted in illness lasting many months. Others in violent uncharacteristic outbursts.Some in bullying. Quite a few were retired early or were dismissed.
    Such behaviour sometimes resulted in the umbrella term “hysteria”.

    It is always a favourite of politicians to allow accusations of psychological disorder against their opponents egs The Loony Left The Lunatic Right The LibDims Insane Trump. In actuality, in some people in industry and politics they withdraw into themselves ( privately ) feeling under attack, depression, conspiracy.
    Oddly, I have not found any works’ doctors…private or Local Authority who perform any other function than bureaucrat in regarding the well-being of employees. Parliament needs a proper doctor. There be hysteria afoot in lockstep with Change as in 2008 but more so.

  32. Stan Walker
    Posted February 19, 2017 at 5:47 pm | Permalink

    The problem is fixed establishments are at a disadvantage to Internet ones.
    We need to make a tax charge for Internet sales. This will have two advantages 1 take pressure off and tax all UK sales.

  33. Lindsay McDougall
    Posted February 19, 2017 at 6:13 pm | Permalink

    Why not freeze business rates on high street premises and levy rates on warehouses? That would help high street busineses at the expense of internet based businesses.

    Looking ahead, what will the VAT on robots be? If they are going to put a third of our workforce out of a job, we will need to tax them.

    • Lindsay McDougall
      Posted February 20, 2017 at 6:00 pm | Permalink

      Taxing robots – I see that no less an authority than Bill Gates agrees with me.

  34. ian
    Posted February 19, 2017 at 6:13 pm | Permalink

    The bankers have now told the treasury to do away with plans for new banks like williams and glyn by RBS and friends and say they will care of small and mid size businesses, yeh they will take care of them alright won’t they john.

  35. Anonymous
    Posted February 19, 2017 at 6:27 pm | Permalink

    In a socialist society (which we actually live in) the productive always have to be taxed to fund the unproductive.

    Hopefully Remain voting (liberalist London) will take the biggest spanking.

    It will also highlight the nonsense of house price inflation – true parity should produce the £5 Mars bar soon.

  36. The Prangwizard
    Posted February 19, 2017 at 6:28 pm | Permalink

    Business rates and Council tax are taxes on capital. Surely only those with socialist political sympathies can have no problem with taxes on capital.

    How about a levy on the value of bank deposits, the value of stock and bonds. What’s the difference? One of course is that the owner of property is captive, the owner of stocks etc. will be out of the country in a flash. Does Mr Redwood have no problim in principle with a tax on savings?

  37. Ed Mahony
    Posted February 19, 2017 at 6:53 pm | Permalink

    Thanks to Mr Redwood for allowing me to comment here, and apologies for many of my long and silly comments. Spending too much time online. So taking a break. Best wishes.

    • leavewon
      Posted February 20, 2017 at 1:16 pm | Permalink

      Oh Ed
      Your comments aren’t silly. They’re very compassionate, if a bit lefty
      and are certainly no worse than mine.

  38. turboterrier
    Posted February 19, 2017 at 6:53 pm | Permalink

    The question?

    How do you raise enough money for good purposes without overtaxing the people and businesses which generate so much of the national income?

    Do away with a lot of the “under the counter taxes” associated with all the green crap being borne by every bill payer in the country. If energy is cheaper which is a major cost businesses especially become more competitive and expand. Start to apply a taxation level to take account of all the land owners who have numerous turbines which has increased their income by millions and also increased the value of their land. This would obviously have to apply to the Crown Estates and it use for off shore turbines. Leave the land owners with 20% net profit on their leasing payments which are in reality a form of unearned income. One farm near to me I year ago valued at £1.5m, now with five turbines £4.1m. Business rates should take in both businesses, Farm and Power Station.

    As in Spain all self employed businesses are VAT registered, it helps stop the black economy and make people moonlighting become legal as the penalties are severe and fall not only on the workman but also the house holder. Accounts have to be submitted monthly for the purposes of paying or reclaiming the Vat. If a self employed company fails, it fails with only one month of outstanding accounts.

    In Spain, buy a property and the taxes on selling within the next ten years are on a sliding scale on the profit. First year of ownership if sold 90% tax on the profit. These taxes are offset by the property owner keeping all Vat registered receipts to claim against the liability.

  39. margaret
    Posted February 19, 2017 at 6:56 pm | Permalink

    some say introduce a land tax on more than 10 acres but all are struggling and much more would be sold off for housing.

  40. Jack
    Posted February 19, 2017 at 6:59 pm | Permalink

    “Whatever is technically feasible is financially possible. To the perpetual question ‘Where is the money coming from?‘ the answer is now clear. It comes from the only two institutions we permit to create money funds: the treasury of the sovereign government and commercial banks. And the rate at which we permit either to create funds is pretty much a matter of public policy.”

    – J. Fagg Foster, 1966

    • Jack
      Posted February 19, 2017 at 10:12 pm | Permalink

      Note the words “treasury”, not “central bank”. HM Treasury creates the money supply, not the BoE. QE is not money creation, is it simply an asset swap that is slightly deflationary to the macro-economy (but that’s a story for another time, and I’ve already commented a lot about QE previously here).

  41. Original Richard
    Posted February 19, 2017 at 9:06 pm | Permalink

    Is it not possible to institute a very low rate of tax on the UK turnover of all companies who sell in the UK ?

    This should be relatively simple to implement and unavoidable for those multinationals who are able to move profits to other countries to avoid corporation tax.

  42. fedupsoutherner
    Posted February 19, 2017 at 10:51 pm | Permalink

    I don’t think people would mind paying tax if it went on things that benefitted us and what government says it will be spent on. Instead we find our money wasted on green crap, HS2 foreign aid (which really p—ses me off), Hinkley and other vanity projects.

    There is so much money wasted by government and if it were spent properly this country really would be wealthy instead of just the favoured few being wealthy.

  43. fedupsoutherner
    Posted February 19, 2017 at 11:07 pm | Permalink

    Lots of interesting comments today but surely, however the tax is raised businesses will just pass on the extra charges to their customers so we pay whatever the outcome. You can’t win. There again, this money is being ill spent.

  44. JM
    Posted February 20, 2017 at 8:38 am | Permalink

    It does seem iniquitous that large, profitable business operating from large unattractive sheds, which have declined in value should see a decline in their rates whilst small, marginal business operating from the high street should see their rates rise.

    I would abolish business rates and levy all business taxation through a tax on the profits of the business.

  45. Stuart Saint
    Posted February 20, 2017 at 10:35 am | Permalink

    I looked, briefly I will admit, at the list Guido published and was very surprised to see the number of REDUCTIONS in business rates down the list, my own area included.

    If you have a system based on property values rather than say headcount, and you do not revalue regularly, you set yourself up for this problem.

  46. benjamin weenen
    Posted February 20, 2017 at 8:33 pm | Permalink

    If Redwood favours taxing income and profits as fair, why not extend the same logic to the prices we pay for goods and services? After all why should only taxes penalise success?

    Also, Redwood should know that as Business Rates are a direct tax on rents and thus selling prices, any change to the rate of one, is merely capitalised into the other. In other words, over the long term at least, changes to the revenue raised by Business Rates, up or down, will not change the costs businesses pay for occupation of their premises.

    It would of course be better to turn UBR from the best tax the UK has to the best tax their is ie a tax on the rental value of land. Which would help market efficiency, rather than taxes on success, which do the opposite and rather bizarrely, Redwood appears to prefer.

    Reply Government does charge taxes on purchases – it’s called VAT

  47. a-tracy
    Posted February 22, 2017 at 5:48 pm | Permalink

    I read today that some small shops in a precinct were being asked to pay £2500pa to £3000pa in business rates -v- the rates they currently paid of between £150 and £200pa and I thought crikey how did they get such low rates now? I know of a small shop with £7000pa rates for the last few years?

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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