Rural pubs must be offered 100% rate relief if they are to survive, according to the Federation of Small Businesses (FSB).
Village businesses such as shops and pubs are entitled to 50% rate relief under the Rural Rate Relief scheme but local councils also have discretionary powers to grant 100% relief.
According to a FSB poll, 47% of rural businesses are missing out on any form of rate relief.
In a poll of FSB members, 44 per cent said they relied on a sole pub, shop, post office or petrol station in their area.
The FSB's report, a new approach to the rural economy, calls for the Treasury to make more funds available to local authorities so they can grant 100% rate relief for a fixed period of just 12 months to help these vital village business weather the downturn.
It also calls for:
• A planning system that encourages the development of a vibrant and diverse business community in the countryside
• Incentivising local authorities to encourage tourism
• Greater fiscal help for our rural small businesses
"Every week we hear of the death of village shops and pubs yet the Rural Rate Relief scheme, which was specifically set up to help these rural businesses, is being chronically underused," said Linda Walton, FSB rural affairs and tourism chairman.
"Village shops and pubs are at the heart of village life and the failure of such a business can devastate local communities, the Treasury must ensure our village shops and pubs do not go the same way as the Royal Show by enabling our local authorities to give 100% rate relief during this downturn."