Fears businesses will be hit by a form of ‘stealth tax’ as part of improvement scheme in St Albans

Crowds of people on St Peter's Street

Crowds of people on St Peter's Street - Credit: Archant

There are fears that businesses will be hit hard by a form of ‘stealth tax’ to help enhance St Albans city centre.

Paul Hargreaves, owner of Mail Boxes Etc (MBE) in Holywell Hill, has voiced concern about a plan to create a Business Improvement District (BID) in St Albans.

The district council has expressed its support for the scheme, which if voted through in a ballot closing next Thursday (10), could provide an extra £525,000 a year to make improvements.

Last month 530 businesses and organisations in the proposed designated BID area, including St Peter’s Street, High Street, Chequer Street, Holywell Hill and some side streets in the city centre, were posted ballot papers to decide if it should be set up in St Albans.

The area also takes in two shopping centres, The Maltings and Christopher Place, along with St Albans Cathedral and the council offices.

But Paul dismissed the scheme as a “stealth tax implemented in order to alleviate the cost of cleaning and maintaining a town centre, as more businesses on our high streets close and are converted into flats and houses.

“Councils across the country are having to find new ways to subsidise essential services. As a business in St Albans we already pay business rates and we are being asked to pay a [levy] for a BID.”

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If the scheme is approved, businesses in the designated area will be hit with a levy of a proposed 1.8 per cent of their rateable value. Those with values of less than £10,000 will be exempt and will not be able to vote in the ballot.

However, Paul said: “As a retailer I cannot afford this.”

He explained that with business rates increasing next year, “we are already being asked for another five per cent, plus the 1.8 per cent increase based on our valuation for the BID.

“[The scheme] claims to be able to restore the great numbers of customers many traders enjoyed before current economic conditions, before the public had the ability to shop via the web and before out-of-town shopping with free parking.

“Many local businesses are under the impression that the BID is a voluntary tax. This is incorrect; it is a compulsory payment of 1.8 per cent of the business’s rateable value.”

Furthermore, he said, “it is only payable by city centre businesses, and not payable by supermarkets based out of town with free car parking spaces.

“Also, those based in Harpenden will not pay the tax and possibly gain the benefit of the BID.”

What infuriates Paul is that while millions of pounds are paid by local businesses in rates annually, “we get no waste collection, have no tourist information office and if we want a parking space, it will cost us £500 [to rent from the council]. We pay enough already and cannot afford to pay another tax.”

Paul also warned that the scheme had caused controversy after its introduction elsewhere in England, pointing to Rugby where questions have been raised about the transparency of its scheme.

He said: “Rugby’s levy has increased to up to six per cent, so we are worried that 1.8 per cent is a starter figure in St Albans. In Rugby they have used the money to pay for street cleaning, CCTV and street rangers. These are essential services that should be paid for from council tax, so it’s quite worrying.”

What is more, small businesses such as his will have less of a say in the vote than those with larger premises, including the council and Marks & Spencer.

For the scheme to be successful, a straight majority is needed as well as a majority based on rateable values.

Paul said: “The vote is based on the rateable value, so the council toilets have a bigger vote than me – as all the council buildings have a vote, along with M&S.”