March 8th, 2017 / Insight posted in MKS Comments

Spring Budget 2017: Business rates are a latter-day window tax and should go the same way, says accountants Kingston Smith

“The Chancellor announced some reforms to alleviate the impact of the new business rates but has missed an opportunity to tackle the bigger issue of how local taxes are raised,” says Mike Hayes, a tax partner with Kingston Smith. “The present system of local taxation is property based, and represents little advance since the eighteenth century’s notorious window tax. It is a penalty on owning property which has little relevance to local economic activity.

“A better solution would be local income taxes, perhaps levied on a regional basis. State and city income taxes work in the US as do state sales taxes. And of course the Scottish Parliament has the power to vary income tax rates, and the Northern Ireland Assembly is proposing to reduce the rate of corporation tax to 12.5 per cent. This would be a modern tax system for a modern age, not an eighteenth-century one.”