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Published
Mar 24, 2021
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Retail leaders are disappointed at "nothing new" business rates review

Published
Mar 24, 2021

There has been widespread condemnation of the UK government’s interim review of business rates, published Wednesday, with many saying the report offers nothing new.


Image: Public domain


Disappointed retail bosses mostly said the report fell short of setting out a definitive position on whether there will be a substantial cut in business rates in the autumn when the Treasury will publish its final review. It was also unclear if an online sales tax will be introduced.  

The 33-page interim report which sets out a summary of responses to last year's evidence from 487 respondents, disclosed a string of proposals and suggestions from industry players ahead of a planned fundamental review of the business rates system. This will set out the government's “priorities for reform, and its longer-term vision for the business rates system”.

But property expert Colliers said it was “desperately disappointed” with the review and had hoped “for something new” in the report that “just repeats what’s been said for years”. 

“Everything that’s been said today has already been said on all previous consultations. It’s like Ground Hog day,” complained John Webber Head of Business Rates at Colliers.“We are desperately disappointed there is no indication of further action on business rates until the autumn, which seems like kicking the can down the road yet again”, he said. “The Government had a real chance to grab the bull by the horns today. Instead it looks like it hasn’t even started the walk to the field”, he added.

Jerry Schurder, head of business rates at Gerald Eve, said the report was a “huge disappointment for desperate ratepayers, offering no new insight into Government’s thinking".

He told the Daily Telegraph: “It is the embodiment of Government inaction, exposing 16 wasted months since the review was promised and the complete disregard of the similar review in 2015 and the 2019 Treasury Select Committee inquiry, both of which produced the same feedback and dissatisfaction with the current system”. 

British Retail Consortium spokesman Dominic Curran urged the Government to act as soon as possible on its findings, “so we can fix this broken tax once and for all”.

ONLINE SALES TAX

Physical retail leaders have long been calling for a radical change in business rates which they believe give pureplay online retailers an unfair advantage. That advantage has been exacerbated by the pandemic with stores forced to close and consumers shifting their allegiance to e-commerce, to order their goods online.

Within the review, respondents welcomed the introduction of an online sales tax as an “opportunity to ‘level the playing field’” between online retailers and offline businesses that pay business rates for property.

“The vast majority” of stakeholders “appreciated” that an online sales tax is “unlikely to replace business rates”, given the large amount of revenue they generate. 

But several supported ring-fencing an online sales tax so revenue it generates goes towards business rates reductions. However, some participants warned that such tax will be inevitably passed onto consumers, increasing prices and having a knock-on effect on low-income households. 

A “sizeable minority” suggested that an online sales tax “may help to rejuvenate the high street and help to re-establish tourism and communities there as a result”.

Within the report there were also suggestions a “delivery tax” could be a more workable alternative to an online sales tax. 

The Treasury is understood to be considering two types of online retail tax to either compliment or replace business rates. This includes a levy of about 2% on all goods bought online and a tax on consumer deliveries.

Jace Tyrrell, chief executive of New West End Company, which represents 600 businesses on Oxford Street, Bond Street, Regent Street and in Mayfair called for all online sales to be taxed, not only retail but travel, software & services. 

“A 2% tax rise for all online sales would raise £14 billion per year; enough to justify a significant reduction in rates”.

He called for the government to “ensure that our [business rates] system is fit for an increasingly digital 21st century and ensure that they run in a fair way to reflect the ever changing environment our businesses operate in. 

“With online sales tax options already raised in the Treasury’s consultation paper on business rates, we would urge the Government to use money raised to reduce and reform the level of business rates”.

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