An initial remark: this exercise is a bit of a scam because Westminster, as a local legislative body of an EU province, cannot scrap the laws that really need to be scrapped – we should basically roll back to 1972, carry out a comprehensive law review and then put in place only the legislation that is necessary for our own purposes as a country. A prerequisite for this is that we leave the EU. Until that happens we cannot establish suitable and democratic legislation in this country.
To my proposal:
Over the years I have been a CEO and company (co)owner in five or six countries. I know of no other country which shoots itself in the foot like the UK, by demanding that start-up and unprofitable companies pay business rates – for small companies de facto a tax on investment, deducted directly from their investment capital. Among all the taxes this is probably the most insane. It should be scrapped. All company taxation should be based on profit: no profit – no tax.
Why does this idea matter?
It is important because removing business rates will help young companies and start-ups through the initial very dangerous phase, where most falter, as quickly as possible. When you start a new company – and I have started quite a number of those – you want to bring it through to profitability as quickly as possible, in particular in a country like the UK, where the venture capital sector is so underdeveloped.
Start-ups are often based on ONE good, often hi-tech and advanced, idea. Quite often, young entrepreneurs are handicapped by not having sufficient capital to patent inventions, and even if they do, to fight off those who violate their patents and steal their ideas. Getting successfully through this very vulnerable phase quickly is vital for a company. The business rate system kills companies that we can not afford to lose.
With regard to rates on other, older, companies in (hopefully) temporary difficulties, business rates are a burden which costs jobs. It is a stupid type of taxation, which should be replaced by a tax on profit, or perhaps on dividends.