A Cardiff Council cabinet member has criticised recommendations by a leading trading association for a new business rates system based on energy use.
Councillor Russell Goodway, cabinet member for Finance and Economic Development, said calculating business rates based on energy efficiency would not be universally popular in Cardiff.
He said: “The suggestion is particularly detrimental for those businesses operating in traditional environments where buildings are very old and not energy efficient.
“I’m not sure just changing the basis on which business rates are calculated in energy is necessarily a good thing.”
The British Retail Consortium today published a report outlining ground-breaking new reform options on business rates.
The retailers suggested replacing the current system with a tax based on measures such as energy usage rather than property, as well as recommending more regular revaluations.
But Coun Goodway said the current system was flawed and praised the Welsh Government for having committed to debating business rates.
He said: “There has never been a perfect system of business rates.
“We need a system which attracts businesses to locate to the centre. We have to use business rates as a lever to persuade people to invest.”
Graham Morgan, director of South Wales Chamber of Commerce, said the impact on Cardiff businesses would vary.
He said: “If you happen to live in a single office just using lights and a PC then you will welcome these suggestions.
“But if you’re in a large premise using a lot of energy you are not going to be too interested.”
Businesses in richer areas like Cardiff could also suffer because they receive less financial support to improve the energy efficiency of their buildings.
Matthew Jones, Environmental Sustainability Officer at Cardiff University’s Welsh School of Architecture, said it is often harder to make properties in the city centre more sustainable.
He said: “Most businesses in the city centre will be in rented properties, sometimes in historic and restricted buildings so whether or not things like solar panels can be installed is difficult.”
But despite the potential problems faced by Cardiff businesses to make changes to improve energy usage, Director General of the British Retail Consorium, Helen Dickinson, said the economy would benefit.
She said: “We have a once in a generation chance to fundamentally change the business rates system and the time is right to think creatively.
“These potential options would be good for the public, the economy and businesses small and large.”
John Rogers, Chief Financial Officer at J Sainsbury who has chaired the project, agreed with Coun Goodway that the current system of business rates needs reform.
He said: ‘The current system is outdated and cumbersome and does nothing to encourage retailers to invest.”
As well as basing the tax on measures such as energy usage, the BRC’s Road to Reform report also recommended rewarding job creation by offering a discount based on a given value per employee.
In 2012 the Business Rates Wales Review was published after Professor Brian Morgan set up a group to examine the business rate regime in Wales.
Mr Morgan, of the South Wales Chamber of Trade and Commerce, said the next step is for Cardiff business to feed into the Welsh Government’s ongoing consultation.
He said: “Rather than another debate, we need to hear from businesses in South Wales.”