Action needed to “protect shops and jobs”

At a time when shop closures have become an all-too-common sight across the country, Business Rates – a tax on our high street – are set to rise once again. With the Business Rates multiplier rising to 50.4p in the pound, retailers will now shoulder an additional £200m of taxes, as of today, 1 April 2019.

The British Retail Consortium (BRC) wants to see an end to this Business Rates burden. In a submission made to the Treasury Select Committee today, the BRC sets out a framework to fix for broken business tax system under the principles of Relief, Review and Reform.

Since they started in 1990, Business Rates have risen 45 per cent, from 38.4p to 50.4p in the pound, meaning shops will now be paying over half of their rateable value again in Business Rates before they have even made a penny in sales. The current system is contributing to the rising number of store closures and discouraging new businesses from taking over empty shops.

Under the current system, business owners that make improvements to their shops see their tax bill rise as the rateable value increases. For example, adding solar panels to the roof will result in a firm paying higher Business Rates.

To add insult to injury, those firms whose rates bill is found to be too high are forced to subsidise those who are paying too little as the system lacks the flexibility to correct itself quickly.

The result – retail has seen a drop of 48,000 jobs between 2017 and 2018 even though the economy as a whole added 415,000 new jobs over the same period.

The BRC has called for a number of changes to be made, culminating in an Independent Review of Business Taxation that must look at how various business taxes should be levied to ensure that the tax framework is fit for the 21st century.

Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said: “Retail is in the midst of a transformation as new technologies and changing consumer behaviour impact the way we shop. The investment needed for this reinvention is being held back by a rising tide of public policy costs, with Business Rates the biggest among these.

“Retail accounts for five per cent of the economy, yet pays 10 per cent of all business taxes and a staggering 25 per cent of Business Rates. This is simply not sustainable; the raft of shop closures and job losses are testament to that.

“While Government fiddles at the edges, retail suffers and consumers pay the price. The Treasury Select Committee Inquiry comes at a critical moment for the retail industry. If the Committee can seize the opportunity to find a way to address the madness of a system which is strangling our high streets, they can protect shops and jobs and put British retail on the right trajectory for the future.”