Labour leader Ed Milliband has said that a Labour government in power would immediately reverse a business rates rise due in April 2015.
Speaking at the Labour conference in Brighton this afternoon, Milliband said up to 1.5m businesses with properties worth an annual rent of £50,000 or less would benefit, with the party adding they will freeze the rate in 2016.
The party claims this would save small businesses, such as pubs, shops and hi-tech start-ups an average of nearly £450 over two years, with some firms saving £2,000.
A planned cut in corporation tax from 21 per cent to 20 per cent, which is due to come into force in April 2015, would also be reversed by the party and would help pay for the business rate cut.
Labour argue that while small businesses had seen their rates rise in recent years, big businesses had seen their corporation taxes fall by £6bn since 2010.
Edward Cooke, Director of Policy and Public Affairs, BCSC said it was positive to see the Labour party acknowledging concerns about the negative impact the current business rates system is having on the retail industry.
“Labour‘s proposed rates freeze will clearly help some smaller businesses, but ultimately what all political parties must realise is the system is no longer a sustainable way of collecting tax to pay for local services.”
However, John Webber Head of Rating at Colliers International described Mr Milliband‘s promise as a ‘sticking plaster rather than a cure.‘
“Whilst any move to make things easier and more affordable would be welcomed by the high street and businesses across the UK. What they really need is a fundamental review of the business rates system,” explained Webber.
The change in taxation proposed by the Labour leader will reportedly cost bigger firms almost £800m a year but he insists that jobs of the future are gong to be created in a large number of small businesses, not a small number of large businesses.
John Cridland, Head of the Confederation of British Industry, told BBC Radio 4‘s Today programme: “Some of the tax changes that we hear that Mr Miliband will propose are not particularly pro-business.
“Reducing business rates for small companies is a good thing to do, but I wouldn‘t do it by increasing taxes on investment, on research, in job creation, which is what will happen if you put up corporation tax.”