Magazine article Public Finance

LGA Would 'Peg Local Business Rates'

Magazine article Public Finance

LGA Would 'Peg Local Business Rates'

Article excerpt

Local authorities will peg business rate increases to no more than inflation if they are returned to local control as part of a shake-up of the finance regime, town hall leaders have promised.

The Local Government Association said authorities would give the inflation guarantee, under which increases could outstrip inflation only with the agreement of local businesses, in exchange for once again being able to set rates locally.

The promise, made as the LGA launched its own wide-ranging devolution report on local government on May 22, is an attempt to circumvent business' long-standing opposition to returning commercial rates to local control.

LGA chair Sir Sandy Bruce-Lockhart said he understood companies' fears that they would be stung by cash-strapped councils as they had been by some in the 1980s.

'We're not saying that more tax needs to be raised, what we're saying is that more tax should be raised and retained locally, as it is in most democracies in the world.'

Such an approach would, according to the I.GA, give authorities a direct stake in fostering economic growth, since they would benefit from a buoyant locally retained tax base.

But business representatives lost no time in rejecting the proposal. …

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