Birmingham City Council has thrown its weight behind a national campiagn calling on the Government to rethink a property tax stifling commercial development in the city.
Council leader Mike Whitby has put his name to an open letter to the Prime Minister penned by the British Property Federation (BPF) calling for the reintroduction of business rate relief on empty commercial properties.
Firms with properties in Birmingham are currently liable for £23 million in business rate payments on empty buildings while the city council itself faces rates charges of more than £817,000 on a variety of empty premises from industrial units to garages.
The campaign comes at a particularly challenging period for the commercial property sector as the lack of available finance and falling property values have seen a number of key projects shelved or scaled back in the region. The added business rates burden means developers are now shying away from any new speculative schemes while others have even considered pulling down perfectly servicable buildings if they cannot get an occupier.
Coun Whitby, who hosted a BPF breakfast in September and raised the issue at the recent Conservative Party Conference in Birmingham, said the application of business rates was wrong-minded and a barrier to future prosperity.
“The Government’s current ‘tax now, ask questions later’ policy is threatening growth and suffocating vital new developments,” he said.
The campaign is being backed by a clutch of household names from across a range of business sectors including B&Q, British Airways, Next and Legal & General who have joined property heavyweights like Brixton, Canary Wharf and Land Securities.
BPF chief executive Liz Peace, said: “It’s like making the unemployed pay income tax. Taxing hardship and business failure is a ludicrous way to help people through the hard times. Brown must act now to undo this mess.”
Asda, which has admitted flattening a call centre to avoid empty rates, said: “Just as things have become more difficult economically, the government has imposed an illtimed tax on empty properties which has had a number of unintended consequences.”
Support for a Commons motion against the tax, placed by Halifax MP Linda Riordan, has doubled in the last week to over 70 MPs. Riordan said: “Far from being an issue that will just affect jobs and regeneration in Halifax, empty rates will hurt all areas of the country, irrespective of what industry or political alignment they have.”
Shadow business minister Alan Duncan called the tax ‘immoral’, saying: “Taxing something that generates no revenue does enormous damage. Removing the tax relief for empty property rates is bringing to a grinding halt any kind of activity for preparing business premises or developing wrecked premises for future use. It is taking money from people who have not got it to the point where they have to take the roof off or demolish what they have just built.”
Last week three of the biggest names in the region’s property sector – Chris White, Julian Shellard and Mark Swallow – all called on the Government to think again about the tax.