Growth and Infrastructure Bill

Memorandum submitted by Institute of Revenue, Rating and Valuation (IRRV) (GIB 85)

Subject: Growth and Infrastructure Bill (Clause 22 - Postponement of compilation of rating lists to 2017)

I am writing in my capacity as the Deputy Chief Executive of the Institute of Revenues, Rating and Valuation (IRRV) in relation to clause 22 of the Growth and Infrastructure Bill that is currently before Parliament.

The IRRV is the professional body concerned with all aspects of local taxation and local benefits administration in the United Kingdom and has members within both the private and public sectors. Institute members are engaged in the valuation of real property for taxation and other statutory purposes, the appeals processes, local authority benefits administration, local tax administration and financial management in local government. My Institute represents the professional interests of its 4,000 members who work within this broad church. It is the only professional body in the United Kingdom that specialises in the law and practice of local authority revenues and local taxation collection together with the income-related benefits which support these processes.

I do want to draw your attention to the growing unrest at the government’s decision to postpone the non-domestic revaluation. The announcement that it has been postponed until 2017 is unwelcome from a large number of ratepayers’ viewpoints who at present, are paying considerably more than would be due under a revaluation. Of course, we recognise that there are winners and losers from a revaluation; however, the redistribution of value follows the fortunes of occupiers of different classes of property. Those types of occupation heavily suffering under current economic conditions should see their rateable values fall and those in more buoyant trades may well see an increase. We are aware that overall the effect of the revaluation nationwide may be a reduction in total rateable value which will cause a consequent increase in the multiplier to probably in excess of 50p. Furthermore, we also appreciate how unpopular a redistribution of rate liability will be to some whilst we can see how politically this might be unattractive in the lead up to a General Election.

Notwithstanding, the need for revaluation in changing times is more urgent rather than less, and we are extremely disappointed to see that the fairness of the system is apparently being undermined by political expediency. We are deeply worried for the 300,000 ratepayers who will, according to VOA figures, be paying too much in rates for at least two years. There is no mention in the Government’s statement of the use of transitional protection for the 800,000 ratepayers who could be adversely affected or an extension of the current deferment provisions. In the opinion of the Institute, the new retention scheme could have been manipulated to finance a generous scheme over the five year period of the new list. We should like to see more frequent revaluations on recommencement of at least every three years. With electronic data there is also no need for an antecedent date two years before an effective date and we consider one year is feasible.

The UK system is the envy of the World but regular revaluation is a key element of an ad valorium property tax. The yield from an effective property tax is an important fiscal instrument for all governments. A tax which is certain in its levy and even reaches those who regard paying domestic taxes is a favour rather than a duty should not be interfered with in such a random decision. Sir Michael Lyons echoed the strengths of a property tax in his report on Local Government Finance back in March 2007. In supporting the retention of a property tax as a source of revenue for local government, he stressed that it was vital regular revaluations of both domestic and non-domestic property took place. We support that view. In addition, there is a real need to undertake a comprehensive review of reliefs and exemptions; at the present time, these do not interact with each other do not always achieve their purpose. Any possible delay provides us with an opportunity to review the way the current system works.

I thank you for taking the time to read the letter and trust my comments are seen as constructive. If the Institute can add anything further to the current debate, please let me know.

December 2012

Prepared 10th December 2012