Business rates are crippling the region鈥檚 high streets, claim bosses, as new figures reveal the West Midlands is raising an increasing amount of the tax for central government.
The amount of business tax raised for Whitehall by Birmingham alone has soared by nine per cent in a year at a time when many shops and firms are still struggling to make ends meet.
The city council gave 拢396.7 million in business rates to government in 2012/13, an 8.9 per cent increase on 2011/12.
It represented one of the largest increases across the country, with the West Midlands raising 拢1.45 billion for the Government鈥檚 coffers as a whole, a 3.7 per cent rise.
David Johnson, owner of jeweller Rex Johnson and Sons in Birmingham鈥檚 Corporation Street, said retailers are struggling to meet rates based on out-of-date valuations that increase by inflation when real income is actually falling.
He said while his firm had enjoyed some relief because of business rates aid as a result of metro work along the street, the price he was paying was still too high.
He said: 鈥淚t is impossible to cope with the level of business rates that we have here. It is not realistic.
鈥淭he compensation that we have had is only because we are in Corporation Street, which is basically a building site. If we were paying the usual rates then we would be gone.
鈥淎nd inflation means nothing to us 鈥 it is going the other way. You could understand if people were spending more, but they are spending less and have been for the last 10 years.鈥
Retailers including Sainsbury鈥檚 chief executive Justin King have called for business rates to be overhauled to help protect the high street.
Business rates are costing the retail industry more than 拢7 billion a year and increased by 拢175 million in April.
The tax is subject to an annual increase every April based on the Retail Price Index in the previous September. Inflation figures released last week show RPI was running at 3.1 per cent in July. It is based on the rateable value of a premises but is not linked to sales or profits.
Paul Lamb, owner of Sims Footwear in the Great Western Arcade, said some city centre sites have remained empty for 10 years because business rates are too high.
He said a major part of the problem was the revaluation of properties, which was supposed to be completed by 2015, but has now been deferred to 2017.
He said: 鈥淲e are having to pay based on these valuations from 2008 which were optimistic even in boom times.
鈥淢ost of the traditional retail areas in Birmingham have been decimated over the last few years but the rateable values are still based on them being the main shopping areas 鈥 like Bull Street.鈥
Business rates brought in 拢21.4 billion in total for the central government pool in 2012/13.
The Birmingham Chamber of Commerce Group has now called for a change in how it is administered and welcomed plans for councils to share in the income.
Chief executive Jerry Blackett said: 鈥淯nless a business鈥檚 premises are the size of a double garage, or if a firm is building speculatively over the next two years, there鈥檚 little relief on offer. Heavily taxing inputs, like property, drags down business profitability.
鈥淭here are new proposals to allow local authorities to retain approximately 50 per cent of business rates with the rest sent to central government for redistribution.
鈥淲hile we welcome this increased discretion and flexibility, we believe that more needs to be done to ensure that revenue from business rates is spent in ways that are best for local business.鈥
The Department for Communities and Local Government claims business rate relief to small firms has grown from 拢333 million in 2010 to 拢900 million.
A spokesman said: 鈥淚n the past, central government collected all business rates. Now, following our reforms, councils now retain nearly 拢11 billion locally instead.
This new incentive lets local authorities grow their income by supporting new firms and jobs, which could deliver an extra 拢10 billion to the wider economy by 2020.
鈥淭his Government is also working hard to boost our high streets and to offer business practical support to help them thrive.
鈥淭hat鈥檚 why over half a million small firms and shops are getting their business rate relief doubled with 300,000 paying no rates at all for three and a half years and we have scrapped Whitehall guidance that pushed for higher parking charges.鈥
The British Retail Consortium (BRC) recently performed a U-turn on calls to freeze rates entirely by scrapping the annual inflation-based increase.
In a letter to retailers, Helen Dickinson, director-general of the BRC, said it was 鈥渦nrealistic鈥 to ask the Treasury to freeze business rates and that the industry must focus on a medium-term reform of the entire business rates system.
Business rates expert Graham Knight, director of property advisory firm GVA in Birmingham, said businesses in the region are struggling more than most because of the revaluation deferment.
He said: 鈥淚鈥檇 expect 20 to 30 per cent falls in valuations of some properties. That would have a genuine cash benefit to businesses in our region. Across the board, every sector in this region would probably have a lower rateable value.鈥
The rise in business rates comes as Communities Secretary Eric Pickles hit out at councils for draconian parking policies and pointless street clutter that could deter shoppers.
