The business rates system is iniquitous, absurd and broken, says The British Chambers of Commerce (BCC), which is calling on the government to freeze rates for the next two years.
Ahead of Chancellor George Osborne's Autumn Statement on December 5, the business group is also demanding an extensive review and complete reform of the business rates system by 2015, with a new, more responsive and transparent system enacted early in the next parliament.

The BCC describes business rates as "an iniquitous tax that aggravates already uncertain business cash flow and imposes hefty new costs. Business rates are fixed no matter the stage of the economic cycle, company performance or ability to pay. Businesses have had to absorb relentless increases in the uniform business rate, in line with the September Retail Prices Index figure."

It says up-rating on September's RPI inflation figure alone is unsustainable: "Take this year's figure for September, which was 3.2%. Just one month later this had fallen to 2.6%, highlighting the absurdity of using just one month's figure to determine the additional tax that businesses pay."

BCC director general John Longworth said: "There is no question that the business rates system is broken. This is a tax that hits companies of all sizes long before they a make profit, and acts as a drag on business growth and investment. Firms across the UK have been crying out for relief from these burdensome taxes for years, but so far their pleas have been ignored.

"We have just seen that RPI inflation dropped off in October after a spike in September. But it is the higher figure used to determine the additional tax that businesses pay. Now, firms across the country have reached boiling point, and demand action to reform the system as a whole."

He went on: "The Chancellor should use the Autumn Statement to announce a two-year freeze on business rates, along with a root and branch reform of the entire system. We need a new framework that is more flexible, transparent and responsive to changes in the economic environment. We know this costs money, but there is scope to do it within the government's fiscal plan."

The cost to the exchequer of a two-year freeze of business rates would be around £1.7bn, equivalent to just 0.1% of total government spending, according to the BCC.

UK revenue from business rates is equivalent to 1.6% of GDP - the highest of any country in Europe and double the combined income from business property taxes in Germany (0.3%) and France (0.5%).