The Government needs to be ‘curious, proactive and creative' in exploring alternative options to business rates, MPs have said.
A report by the Treasury Committee urged the Government to reform the ‘broken' system and consider alternatives in time for next year's Spring Statement.
It warned that business rates were outpacing inflation, and created an unfair system that places a greater cost on high street shops and sectors like manufacturing rather than online firms.
Alison McGovern, the committee's lead member for the inquiry, said: ‘It's abundantly clear that the current business rates system is broken. The tax represents an increasing burden on businesses, particularly those with a physical high street presence struggling to remain competitive.
‘The Government must ensure that business rates align with its aim to boost productivity and do not disincentivise growth.'
The report read: ‘Given the changing nature of the economy and with high streets on the decline, the Government needs to be curious, proactive and creative in exploring alternative options to such an important source of Government revenue.'
It added that the Treasury should research examples of land value taxes in Australia and Denmark but the committee concluded that none of the ‘numerous alternatives' to the current system have been ‘sufficiently modelled to examine who would be the winners and losers of any change'.
The report also called on the Government to ensure that the Valuation Office Agency was ‘properly resourced' as demands on it are expected to increase as the gap between revaluations is reduced from five to three years.
