THE Federation of Small Businesses has called for changes to soften the blow of potential extra taxation to fund local projects.

The organisation is concerned the forthcoming Business Rate Supplements Bill will impose extra tax burdens on firms.

In particular, the FSB is arguing that small businesses must have a say on all projects to be subsidised by a tax brought in by the Business Rate Supplements Bill.

The new tax is being considered by a Public Bills Committee and the FSB is seeking guarantees that the supplement will be spent only on economic development; that businesses will be consulted and have a vote on all supplements followed by an independent review on how the money is spent; that the public sector will also contribute; properties liable for business rates with a rateable value of £50,000 or less will be exempt; and the £50,000 threshold will be reconsidered once the property market improves.

FSB Devon Policy chairman David Shephard said: "Cashflow is king for small businesses who want to hold on to and train their staff and grow their enterprises during these recessionary times.

"With small business failures entering their hundreds each day, it seems counterproductive to introduce a new tax. However, if business owners are to pay this supplement it is important that they have a say on where it goes.

"This revenue must be ring-fenced for economic development rather than to shore up Government infrastructure projects and local council budgets."