Swapping business rates with land value tax would aid Britain’s Brexit heartlands, research claims
Research found that a huge income boost would be delivered to England's 'left behind' communities who voted in support of Brexit if hated business rates were replaced
REPLACING hated business rates with a land value tax would help Britain’s Brexit heartlands the most, a major review will say this week.
Landowners would be taxed instead of tenants under proposals to scrap the rates-based system put forward in a joint report by ex-Business Secretary Sir Vince Cable and economist Adam Corlett.
They say it will deliver a huge income boost to England’s “left behind” communities who overwhelmingly backed Brexit in the 2016 referendum.
The move would deliver a 21 per cent tax cut for businesses located in the top 20 areas with the highest share of Brexit voters. This compares to the nationwide average tax cut of 6 per cent.
It would also help to rebalance the north-south divide, with London and the South East seeing small tax rises while the rest of the country - 92 per cent of areas - would get tax cuts of up to 46 per cent. This is because of the much higher value of land in London and the South East.
The “commercial landowner levy” would no longer calculate business taxes using the rentable value of buildings and utilities - and instead only tax the land value of a commercial site. It means that the tax would fall on the landlord or landowner rather than the current situation where the renter pays.
The move would deliver a tax cut for hundreds of thousands of small businesses because six in ten rent their premises. The Government’s current review of struggling high streets has refused to consider a change in business rates.
But piling pressure on ministers to widen their review ahead of the launch of his report later this week, Sir Vince told The Sun: “Many of the areas around the country that voted for Brexit feel they have been left behind.
“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.”
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 adapting to the rise of online retail.
“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.”
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