Today at conference, Liberal Democrats have voted for a
comprehensive plan for replacing the broken business rates
system.
The motion based on the report – Taxing Land, Not
Investment – calls for the abolition of business rates
and its replacement with a tax on land values, the Commercial
Landowner Levy (CLL). The levy would remove buildings and
machinery from calculations and tax only the land value of
commercial sites, boosting investment and cutting taxes for
businesses in nine out of ten English local authorities.
Key recommendations from the
motion include:
- Business rates should be abolished and replaced by a
Commercial Landowner Levy based on the value of commercial land
only
- The levy should be paid by owners rather than tenants
- Non-residential stamp duty should be scrapped to improve the
efficiency of the commercial property market
- Commercial land should be taxed regardless of whether the
buildings above it are occupied; the tax should also apply to
unused and derelict commercial land
The full report can be found here.
Liberal Democrat leader said:
“Business rates were a badly designed policy to begin with and
have become an unacceptable drag on our economy. They are a tax
on productive investment at a time of chronically weak
productivity growth, and a burden on high streets struggling to
adapt to the rise of online retail.
“Many of the areas around the country that voted for Brexit feel
they have been left behind. In place of policies the Brexiters
offer only rhetoric. Great swathes of the country demand better,
and this policy offers change to the manufacturing industry and
the small towns passed over by economic growth.”
Founder of the Liberal Democrat Business and
Entrepreneurs Network Andrew Dixon said:
“By only taxing land and not the productive capital above it,
this reform would remove a major disincentive to investment,
boosting productivity and contributing to a necessary revival in
UK industry. While separate action is needed to ensure online
retailers pay their fair share of corporation tax, our proposals
would offer a lifeline to struggling high streets.
“I am delighted to support this initiative which I believe would
boost business and enterprise across the UK, and I am grateful to
members of the Liberal Democrats Business & Entrepreneurs
Network for their valuable contributions to this important
research”
ENDS
Notes to editors:
Conference notes:
A. That dissatisfaction with Business Rates has
reached an all-time high, following a long-delayed and poorly
implemented rates revaluation in 2017 and a deepening crisis on
Britain's high-streets.
B. Recent calls for reform of Business Rates
from all the major business organisations, including the CBI, the
FSB, the BCC, the BRC, the EEF and the IoD.
C. The recommendation in the IFS's seminal 2011
Mirrlees Review that Business Rates should be replaced with a tax
based on land values.
D. Liberal Democrats' longstanding commitment
to Business Rates reform, with a specific emphasis on replacing
it with a land value tax.
Conference believes that:
i) By taxing business premises and equipment,
Business Rates are a disincentive to investment, and are a
particularly heavy burden on capital-intensive sectors such as
manufacturing and renewable energy.
ii) It would be more efficient to solely tax
the land value of commercial property, removing the disincentive
to invest and enabling the state to better capture increases in
land value driven by public infrastructure investment.
iii) By taxing commercial property
transactions, Non-Residential Stamp Duty is an unwelcome burden
on businesses that want to acquire or change premises, with the
result that commercial property is not allocated efficiently.
Conference notes the proposals to replace Business Rates
in the report Replacing the Broken Business Rates System: Taxing
Land, Not Investment and calls for:
a) The replacement of Business Rates in England
(currently set at a rate of 49.3p per pound) with a Commercial
Landowner Levy (CLL) set at a rate of 59p per pound but based
solely on the land value of commercial sites rather than their
entire capital value, thereby stimulating investment, and
shifting the burden of taxation from tenants to landowners.
b) The immediate abolition of Non-Residential
Stamp Duty, thereby improving the efficiency of the commercial
property market and making life simpler for businesses that want
to own or change premises.
c) Ending discounts for empty and derelict
premises and allowing councils to tax unfinished commercial
developments beyond a reasonable construction period, increasing
the supply of commercial property and reducing rents.
d) Abolishing the current system of Small
Business Rates Relief - much of which is absorbed by landlords
through higher rents - and replacing it with a doubled Employment
Allowance, giving every employer a œ3,000 tax cut by reducing
their National Insurance bills, and providing a boost to wages
and employment.
e) Existing relief for agricultural land to be
maintained; relief for charities to be protected except in the
case of private schools and private healthcare.
f) Local authority revenues from Business Rates
to be protected under the CLL through an adjustment to the
redistribution formula, so that tax cuts for businesses do not
mean lower revenues for those local authorities.
g) The transition from Business Rates to the
CLL to take place over 4 years, with bills shifting gradually
from a property to a land value basis and incidence moved to
landlords when contracts are renewed or at rent reviews.
h) Annual revaluations of commercial land
values by the Valuation Office Agency and the completion of a
comprehensive and publicly-accessible Land Registry.
Conference further notes that:
1. Introducing the CLL would give businesses a
net tax cut.
2. Under the CLL, business taxes would be lower
in 92% of local authorities, helping to close Britain's regional
divide and alleviating the crisis on our high streets.
3. The majority of economic sectors would
receive a boost under the CLL, with lower bills in manufacturing,
hospitality and shops among other sectors.
4. Under the CLL, the 61% of small and medium
sized businesses that do not own their own premises would no
longer directly pay property tax, shifting the administrative
burden of tax away from businesses onto a smaller number of
commercial landlords, and saving both businesses and councils
precious time and money.
Applicability: England only.
