The Confederation of British Industry (CBI) is calling for amendments to the Business Rates Supplement Bill, which it fears could result in the burden of extra taxes for businesses.

The new Bill, which had its third reading in the House of Commons yesterday (Wednesday, 11 March), would allow local authorities to levy supplementary taxes designed to pay for infrastructure projects that benefit local economies.

According to the CBI the supplementary taxes, which would follow the overall 5% rise in business rates announced by the government, will particularly affect manufacturers and retailers. Currently, the Bill will enable a 2p supplement to be levied on non-domestic rate-payers – the equivalent of a 4% increase in rate bills.

According to Sir Michael Lyons’ Review into Local Government – Final report (March, 2007), if this was to be applied throughout England, it would raise £800m for local authorities.

The CBI says firms should be entitled to a vote to approve or reject proposed tax supplements for new infrastructure projects. It says this would help avoid projects that businesses don’t actually need, but would mean priority could be given to the most worthy projects that actually help the local economy.

“These extra taxes on business could harm local economies by placing extra financial demands on firms when they can least afford it,” said John Cridland, CBI deputy director-general. “They could make the difference between companies surviving the downturn or going to the wall.

“By amending the Bill to give business a vote, we can ensure that local economies get the right investments, which stimulate economic growth and create jobs, instead of threatening them,” he added.