Give with one hand, take with the other, so whats new

23 October 2008

British shipping holed with £33 million ‘ports tax’ from Gordon Brown
Retrospective taxes on British business undermines economy and confidence

Gordon Brown was attacked today for ‘blundering’ into a £33 million tax hike on British ports, forcing up the tax bills of struggling firms, undermining the economy and damaging British competitiveness. Local firms are now receiving massive backdated tax bills following changes to the way that ports are valued for business rates, with massive new bills being backdated to 2005. The higher bills are only now starting to hit the door mats of local firms in 55 ports across the country.

· Government changes to business rates: Up to this year, one combined business rate bill was paid by each port for all the firms within it. However, the Government’s Valuation Office Agency has decided, when Brown was Chancellor, that each individual firm is now a ‘separate occupation’ and must pay their own business rate bill. The Valuation Office Agency is an arm of HM Revenue & Customs and undertakes inspections for council tax and business rate revaluations. Yet rather than giving advance warning of future changes, it has retrospectively backdated the new tax bills for local firms to 2005. As a result, port businesses across the country have been hit with unexpected, massive bills, just as the economic downturn bites.

· £33 million ports tax: The Government has claimed that it has no idea of the additional tax that will be raised as a result, but has admitted that the changes have resulted in a £19 million net increase in rateable values. Conservatives have estimated this to be equivalent a £8 million a year increase on tax bills, and taking into account the backdating, represents a £33 million tax hit on British ports.

· No impact assessment, no consultation: Parliamentary Questions have revealed that that no impact assessment of the changes was undertaken by the Government, and no consultation of local firms took place. The Valuation Office Agency has arrogantly asserted that it is not their ‘job’ to make an assessment of the effect on the economy.

· Harmful effect on economy: It is feared that many shipping companies may switch their business to Zeebrugge or Rotterdam, finishing journeys by road or rail, and bypass British ports. Ken Kirk of port operations company Stanton Grove, has warned: “If no one actually takes a realistic view in government, they will see business being driven out of the country… We are heading into a recession in any case. This could see volumes collapse over the next few months.” This switching could lead to lower tax revenues across the economy.

· Unfair retrospective taxation: Being able to plan future cash flows is the key to the survival of firms. Yet this backdating contradicts the professed Government policy on retrospective taxation, which states that backdating should only take place where it is ‘fair’, ‘proportionate’, ‘necessary to protect revenue’ and ‘in the public interest’. Gordon Brown’s ports tax breaches each of these four tests.

In a speech today at the Northern Regeneration Summit, Shadow Minister for Local Government, Bob Neill MP, will attack the changes:
“At a time when small businesses are already struggling as a result of the economic downturn, the last thing they need is yet another unexpected tax increase from the Government. This is another Gordon Brown tax blunder, just like his 10p tax con.

“This ports tax will send an unwelcome shudder across the economy. The Government’s incompetent handling threatens to undermine confidence in the economy and damage British competitiveness.”