De-Rating

Abstract

The late government’s scheme for relieving productive enterprise of part of the burden of rates provides a useful example by means of which to summarise our conclusions as to the effect of fixed cost in the short period. We are not concerned with long-period effects. That the system of local taxation exerts an important influence on the flow of new investment is, of course, quite obvious. But it may, in passing, be suggested that from the long-period point of view it is their variability from one part of the country to another rather than their average weight that renders rates an uneconomic form of taxation. The scheme of De-Rating has certainly reduced absolute differences between districts, but relative differences will be almost as great as before.