Campaign to reform business rates picks up steam
The Government is being urged to act on the thorny issue of business rates. Five of the UK’s biggest industry lobby groups in the British Retail Consortium, British Council of Shopping Centres, Association of Convenience Stores, Federation of Small Businesses, and British Property Federation have joined forces to write to the Treasury. The group says that, more than two years after the Government said it would review the tax, it is now time to act.
They’re not the only trade bodies to call for a reform of business rates. In a submission to the Government’s ongoing review the Booksellers Association, which represents more than 800 businesses, said that property costs represented the second biggest overheads for booksellers after staff.
The Booksellers Association said that one way to ease pressure points immediately would be to exempt SME retailers from business rates entirely. The Government has already doubled small business rate relief for two years, making 385,000 small firms exempt since 2014. Groups like the Federation of Small Businesses want this arrangement to be made permanent, alongside other reforms.
Many critics of business rates feel that the system penalises ‘bricks and mortar’ businesses with physical premises, as they are a form of property tax levied on non-domestic properties. According to the Booksellers Association, their members are particularly vulnerable to online competitors.
They said that the trade is one that suffers from ‘showrooming’, where customers go into a physical shop to inspect a product, then go and buy it online.
SMEs are not the only businesses affected. Tesco said that business rates were the single biggest tax liability that the chain paid, at around £700 million a year. CEO Dave Lewis also cited a British Retail Consortium report that warned there could be 900,000 fewer jobs in retail by 2025.
As well as a loss of jobs, the sector could see a rise in incidences of corporate insolvency due to a number of factors, including the introduction of the new National Living Wage and the continuing burden of business rates.
By Phil Smith
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