Businesses rates bills could be cut by half if the government accepted a radical change to funding for local government that increased the money raised from council tax.
That claim has come from David Magor, chief executive of the Institute of Revenues, Rating and Valuation (IRRV), in a speech he is due to make at the Confederation of British Industry’s business rates conference today.
He said: “We need to reduce the impact of the business rate by fundamentally changing aspects of the local taxation system.
“Those changes must bring about a lowering of the multiplier that is used in the calculation of business rates demands. This modernisation process must also provide for better regulation of the business rates process and elimination of business rate avoidance schemes, so that all ratepayers pay their fair share of the burden.”
Mr Magor said the balance of funding between the business rate and the council tax must change to increase the yield of the latter and make it more progressive.
He said the system of A-H council tax valuation bands was “past its sell by date” and should be replaced with one based on capital values of homes, with annual revaluations “which utilise modern automated methods”.
The IRRV also called for the abolition of council tax discounts and exemptions. Instead, HM Revenue & Customs data would be used in a new relief scheme in which taxpayers could claim council tax against personal tax, a step Mr Magor said could remove any need for equalisation in the system.
A recent IRRV submission to the Treasury select committee said there was political reluctance to review council tax, but doing so would be justified because property value changes have not been adequately captured and reflected, meaning the lists are out of date in all local authority areas.
It said council tax was “highly regressive, due to the operation of the wide-value bands [and] the single person discount not correlating to ability to pay”.