By Marcus Leach

The benefit of offering local authorities the opportunity to retain some locally raised business rates risks being negated by the rates themselves rising in an unaffordable way, retailers are warning.

The British Retail Consortium (BRC) is today (Monday) publishing its response to the Local Government Resource Review. The BRC supports the principle of incentivising councils to encourage business growth by allowing them to keep a share of the tax income, providing they do not simply turn it into an exercise in maximising revenue from existing premises. The BRC is also encouraged by the decision to maintain the Uniform Business Rate.

However the BRC is concerned the proposed reforms will fail to benefit either retailers or councils as much as they should if the Government goes ahead with a business rates increase in April 2012 of over five per cent. Convention is that the rate is uplifted each year by September's RPI, which was revealed last week to be a colossal 5.6 per cent. A rise on that scale would have a hugely detrimental effect on retailers' ability to invest and grow.

"The principles behind the proposed reforms to business rates are sound, providing a uniform central rate is maintained to provide much needed business certainty," British Retail Consortium Director of Business, Tom Ironside, said.

"Businesses benefit from council investment in their local infrastructure and the local authorities deserve to benefit in turn where there is genuine growth.

"But this scheme's potential to drive business growth and boost council coffers could be reduced because of the likelihood of a colossal 5.6 per cent rise in business rates next April. Coming on top of a 4.6 per cent rise this year, such an uplift would make it even harder for retailers to thrive at a time of low consumer confidence and poor spending.

"The review of local government resources looks at proactive ways of supporting and promoting business growth for the benefit of local communities. We ask that the Government supports businesses and local authorities in the same way by imposing a lower increase in business rates for the coming year."

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