Ministers are considering handing over billions of pounds raised by business rates to regional mayors as part of one of the biggest shake-ups of the English tax system in recent years.<\/p>\n
Steve Reed, the local government secretary, said the government was working on plans to devolve the tax, which has been the subject of recent protests by pubs and other hospitality businesses<\/a>.<\/p>\n The move is part of a wider plan to shift tax income to local leaders, due to be announced by the chancellor, Rachel Reeves<\/a>, at this year\u2019s budget.<\/p>\n Reeves\u2019 position is in doubt<\/a> given the questions surrounding Keir Starmer\u2019s premiership, but the proposals are likely to be taken up by Andy Burnham<\/a> if he takes over as prime minister, given Burnham\u2019s commitment to devolution.<\/p>\n Reed told the Guardian: \u201cThe chancellor pointed to devolving aspects of income tax, as we discussed, but certainly we look at business rates, too \u2013 or elements of business rates.\u201d<\/p>\n He added that local areas would not simply be allowed to keep whatever they raised in business rates, given this could exacerbate regional inequality, but that the new tax system would reward those areas that grew their economies more quickly.<\/p>\n \u201cThere will always have to be an equalisation mechanism, because you cannot allow areas that are poorer to just sink because they can\u2019t generate the additional revenue from their starting point,\u201d he said.<\/p>\n \u201cBut you want a system that would encourage and reward areas for growing their economy faster or supporting their businesses better, and that would need to be recognised within the system.\u201d<\/p>\n He added: \u201cCurrently this is an idea that\u2019s being looked at. It\u2019s not a worked-up policy, but in principle, because fiscal devolution is on the table, that\u2019s certainly an area we\u2019d look at.\u201d<\/p>\n The proposal is part of a wider move by Reeves to give local areas more control over the tax they raise \u2013 if not necessarily the power to set the rates themselves.<\/p>\n