Memorandum by Chemical Industries Association
(LGB 07)
In response to the request for evidence in the
Press Notice dated 13 May 2002, I am writing on behalf of the
Chemical Industries Association, which is the principal industry
body for the UK chemical industry, representing some 300 manufacturing
sites distributed throughout the UK. The majority are located
in England and are valued according to the contractors' principle.
The industry pays some £200 million annually in non-domestic
rates.
Domestic manufacturers are part of a global
industry and depend critically on their competitiveness to survive
and flourish in international markets. Amongst our main west European
competitors, UK is alone in levying property based local taxes
to collect such a high proportion of business taxes. (This year
business rates are projected to raise the equivalent of 56 per
cent of corporation tax.) These non domestic rates represent a
tax on the fixed asset base unrelated to business conditions and
profitability and can constitute a major burden especially during
times of recession or when profit margins are thin as they are
for many bulk commodity products in the chemical industry.
We are therefore very concerned with any proposed
measure, which would raise the burden of taxes on already hard-pressed
chemical manufacturers. For internationally competitive businesses
additional taxes cannot be recouped through raising prices, and
therefore result in reduced profits and/or lower funds for investment—reducing
the attractiveness of locating investment in Britain.
As we have argued against the introduction of
similar non-domestic rating provisions in Scotland, we do not
accept that rates should be used in a redistributive manner. Differentials
between the valuations of large and small properties are already
reflected in rent and rateable values. If it is intended to help
small businesses, then this should be done through mechanisms
other than business rates.
We have nothing against helping small businesses,
and indeed welcome many of the government's recent measures with
this objective. However, we believe the costs of doing so should
be borne out of general taxation rather than funded from larger
businesses.
Keith Wey
Senior Economist
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