BUSINESSES face an extra £600m annual tax burden if plans allowing councils to raise rates to fund important infrastructure projects get the go-ahead, the Tories claimed.

The proposals had “enormous potential impacts” for the UK’s business community, shadow local government minister Bob Neill argued, when they were already struggling to pay their bills.

Describing the measures in the Business Rate Supplements Bill as a “mistake” in the current climate, Mr Neill said they were the latest in a series of increased costs for businesses.

Backbenchers joined in the criticism, with former Cabinet member John Redwood (Wokingham) calling the legislation “a particularly nasty and spiteful little Bill”, while Brian Binley (Northampton South) warned local authorities would seek to exploit the revenue-raising powers.

Ministers say providing the extra fund-raising power to the Greater London Authority as well as county councils, metropolitan districts and unitary authorities will boost local economic growth.

It would allow the authorities to charge an additional supplement of up to 2p on the national business rate to spend only on projects which would promote economic development.

The measure was recommended by the Lyons Report into local government.