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Local Government Secretary Eric Pickles today stopped plans to hit local residents with a new backdoor parking tax on their weekly shop. The last Government was previously considering proposals to levy a new tax on supermarket parking places by increasing business rates on them, on top of existing rates bills.

Some supermarkets were planning to pass on this new parking levy directly to customers, by listing it as an explicit tax on till receipts. Others shops would have passed it on to shoppers through higher prices or as a car park charge.

The new Government has this week rejected these plans for new stealth taxes. Instead, new powers will be given to councils to introduce local tax cuts – which will include allowing small shops and supermarkets that sell local produce to be given business rate reductions to help support the local economy and local farmers.

The Localism Bill, published this week, contains new powers to let councils set local discounts on business rates, provided that they are funded locally. This would give councils the ability to offer business rate discounts that respond to local circumstances, support particular local businesses or encourage certain local good and services.

The new Government has already increased small business rate relief this year, and will also be making it easier to claim small business rate relief to help small shops. Business rates are the third biggest outgoing for local firms after rent and staffing costs.

Local Government Secretary, Eric Pickles, said:

“With the price of groceries rising, it would be wrong to introduce a new parking stealth tax on hard-working households. As someone who was brought up in a corner shop, I know how every penny makes a difference when families pay for their weekly shop.

“Accessible parking is vital to the lifeblood of the local firms. Hiking parking charges and turning motorists into a cash cow is a false economy – as it drives shoppers away.

“Instead, we should be looking at local tax cuts. We have already increased small business rate relief to help small shops, and will give councils new powers to reduce business rates on shops which sell local produce and support the local economy.

“Our plans to allow councils to retain their business rate income will also mean councils start having a stake in growing their local economy and support all types of shop, big and small.”
 

The last Government was actively considering proposals made under the Sustainable Communities Act to levy new taxes on supermarket parking places following proposals from Exeter City Council.  The new Government has this week ruled such proposals out.

Ministers argue that supermarket car parking spaces are already valued and liable for business rates. Instead, the Localism Bill introduced to Parliament this week contains powers for local authorities to grant discretionary business rate discounts (which might enable them to allow discounts to stores that source local goods, for example).

The Government is also supporting small local shops by simplifying the process for claiming small business rate relief and has also significantly increased small business rate relief for a year. The Government is also committed to reforming business rates, by allowing councils to keep rates revenue they collect rather than it being snatched back by Whitehall. This will make councils less dependent on Whitehall funding and give them a stake in growing their local economy.

This proposal was first put forward as part of a list of ideas submitted by local authorities in 2009 under the Sustainable Communities Act 2007. This week other proposals under the Act were approved to be taken forward because they echo the Localism Bill, which will give people more say, more choice and more ownership of their local services. 

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