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Business rates: Let councils keep the proceeds, says report | |
(about 4 hours later) | |
Councils should be allowed to keep some of the near £1bn they collect in business rates, a report says. | |
Allowing local authorities to retain some of the money would give them an incentive to help the economy, added the independent review commissioned by the Welsh government. | |
At present, councils collect rates and the money is then redistributed among them by the Welsh government. | |
The review says control of the rate system should be devolved for reform. | |
Led by Cardiff Metropolitan University economist Professor Brian Morgan, the review says changes to business rates should not be seen as a "cure-all" for the economy. | |
It says there are strong arguments for greater retention of rates by local authorities, but acknowledges this could not happen unless the system was devolved. | |
Councils should be allowed to keep half of future increases in business rates revenue after 2015, the review says. | |
The rest could be pooled and shared among councils that are less successful in generating economic growth. | |
The review says its recommendations would make a "needlessly opaque" system "more transparent". | |
Business rates are a tax on non-domestic properties. The money is collected by local authorities and then redistributed by the Welsh government according to a formula based on population and needs. | |
Councils collected more than £900m in business rates last year. It ranged from £12m in Blaenau Gwent to more than £179m in Cardiff. | Councils collected more than £900m in business rates last year. It ranged from £12m in Blaenau Gwent to more than £179m in Cardiff. |
Prof Morgan said: "At the outset the report emphasises that the primary role of business rates is to raise funds to support the delivery of local services. | |
"In this context we have recommended localising the income from business rates to incentives local authorities to increase their tax base." | |
Value | |
The amount businesses pay is decided by their rateable value, although some pay less under the small business rate relief scheme. | The amount businesses pay is decided by their rateable value, although some pay less under the small business rate relief scheme. |
At present, businesses with a rateable value of less than £6,000 pay nothing, with further reductions available up to £12,000. | |
The review was "very much in favour" of extending the relief scheme beyond its scheduled withdrawal in March next year until at least 2015. | |
Although research shows varying rates has a "negligible impact on the wider economy", rates remain a big concern for small and medium-sized businesses, the review adds. | |
The Welsh Conservatives want businesses of up to £12,000 to be exempt from rates, with relief tapered up to £15,000. | |
Tory business spokesman Nick Ramsay said: "Private sector growth is the key to creating Welsh jobs and small businesses in particular deserve far more support from the government." | |
Plaid Cymru economy spokesman Alun Ffred Jones said his party would graduate rate relief up to £18,000, helping more than 8,000 companies. | |
Business Minister Edwina Hart said she had written to the rest of the cabinet to formulate the Welsh government's response to the report. | |
She said: "I am confident it provides us with much to consider in addressing the challenges to create a better, more accountable and competitive business rates system in Wales." |