TOWN and city centres in the West could soon be scarred with more unsightly "bomb sites" than at any time since The Blitz because of the controversial tax on empty buildings.

The Government "stealth tax" on vacant shops, offices and warehouses means it is cheaper for owners to knock down buildings than leave them empty.

Regeneration schemes are also being hit as developers fear being stung by the Treasury if they create new buildings that may stand empty for a few months.

From April 1 owners were told they would have to pay 100 per cent rates bills after six months of vacancy for industrial property and three months for all other commercial buildings.

At a conference in Swindon yesterday Swindon council chiefs said the tax was a problem because they would have to fork out hundreds of thousands of pounds in "empty rates" or pay for buildings to be demolished.

One of several sites currently being flattened in Swindon is a 14-acre plot at North Star where Clare's Retail Equipment used to make supermarket equipment. The business, which employed nearly 500 people, closed several years ago, leaving the site empty.

Despite being unusable, the new tax would cost Swindon Council £110,000-a-year on the one site alone. Instead, the council has set aside £430,000 to demolish the factory.

Councillor Nick Martin, lead member for finance at the Tory-run authority, said: "We are spending public money demolishing buildings to avoid this ill-thought out stealth tax.

"Gordon Brown should be ashamed of making people whose properties are empty pay even more tax, thus making a bad situation even worse. It is another Labour stealth tax on hardship."

Peter James, chief executive of The New Swindon Company, which is overseeing the town's regeneration with the council, said the tax would do nothing to help revitalisation schemes.

He said: "Sites have been demolished to make way for massive regeneration, but charging empty rates means that developments are likely to take longer and will see smaller businesses face an even tougher time in the current climate.

"If the Government is seriously committed to helping business, creating jobs and not hindering progress, then it will reapply the relief forthwith.

"Government policy is now backfiring because quality regeneration developments are less likely to happen given the economic downturn."

The British Property Federation (BPF), the trade body for the property industry, has been campaigning nationally for the relief to be reapplied.

The CBI, the British Chamber of Commerce and a growing backbench rebellion of MPs have all condemned the tax. More than 35 MPs have signed a motion calling for empty rates to be scrapped.

Peter Cosmetatos, the BPF's finance and investment director, said it was a problem across the country "as owners choose between bankruptcy and demolition".

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