Leader of the Liberal Democrat party Sir Vince Cable has called for a new “commercial landowner levy” to replace the UK’s business rates system.
Under the proposal, buildings and utilities would be removed from the tax calculations, leaving only the land value of a commercial site.
At the moment, the £30 billion business rates system is calculated every five years according to shop rental values, a multiplier that rises annually, in line with Consumer Price Index inflation.
The levy is paid for by tenants, rather than landowners.
Lib Dem advisers and economist Adam Corlett are due to publish a report later this month that claims businesses in 92 per cent of local authorities would pay lower business taxes as a result of a commercial landowner levy.
In the report, the Lib Dems argue that the rates should be paid for by land owners, and not the tenant, “sparing over half a million SMEs the bureaucratic burden of property taxation”.
Crucially, businesses in the most deprived areas of the UK would see the biggest fall in their bills, while stores in expensive areas such as central London would see a small increase.
“Business rates were a badly designed policy to begin with, and have become an unacceptable drag on our economy,” Cable said
“They are a tax on productive investment at a time of chronically weak productivity growth, and a burden on high streets adapting to the rise of online retail,” he added.