Mortgage help for struggling families
Dec 4 2008 by William Green, The Journal
Controversial business levy finds no friends in the North
NORTH East firms were last night facing a new tax bombshell with ministers pressing ahead with a controversial business levy despite fears it could worsen the recession.
Business chiefs expressed alarm after the Government revealed that plans for supplementary business rates are being included in its legislative programme for the next year.
Councils would be handed powers to put a 2p levy on rates to raise cash for schemes boosting prosperity under proposals in the Queen’s Speech, which emphasised that the Government’s "overriding" priority was to ensure the stability of the British economy.
The levy would be imposed from 2010 as the economy is expected to return to growth and when the Government is predicted to slash public spending to pay for its £20bn fiscal stimulus package.
Newcastle City Council leader John Shipley recognised business concerns but said he would consider introducing the 2p levy to pay for specific schemes, adding: "I cannot rule out that in the future.
"We may look at raising a supplementary business rate, but it would have to be with the consent of the business community."
The cash would have to be used for specific earmarked projects and not just raising money for the council, he added.
The North East Chamber of Commerce said the Government had used the Queen’s Speech to deliver a blow for businesses at a time when they could ill afford it.
Chamber head of policy Ross Smith said: "The Government should be taking measures to help businesses with cashflow and finance, not imposing an additional raid on their bank accounts.
"We now need to see a commitment from all councils in the North East that they will not seek to impose extra rates until businesses support the move."
The NECC called for any cash raised to be used directly on economic developments.
Jeff Reid, Liberal Democrat leader of Northumberland County Council, said: "If we are trying to free up the economy and get things moving, giving tax-raising authorities more authority to raise tax seems a bit perverse to me."
Newcastle Central MP Jim Cousins said supplementary business rates would add to problems of areas of high need likely to introduce a levy.
Hugh Morgan Williams, chairman of Washington-based Canford group and a senior member of the CBI, said: "When other tax breaks are being given, it appears business is suffering at the expense of the individual." He also expressed concern that an expansion of flexible working was an additional burden for businesses at a time when companies could not afford it.
