The business rates burden for retailers large and small, online and physical, needs to be reduced. As part of the Government’s goal to maintain a competitive tax environment for business, further measures to reform business rates are needed to fix an unsustainable system that continues to discourage investment in jobs and growth.
Despite last year’s review, retailers will pay an additional £2 billion over the next three years compared to the last three years. Business rates are deterring investment in local communities, causing shop closures and job losses in hard-pressed communities and preventing retailers from delivering what their customers want in an efficient and cost-effective way.
In England, the retail industry contributes approximately £7 billion of rates annually – nearly one-quarter of all receipts – far more than any other industry. Internationally, the UK pays among the highest tax on property as a proportion of GDP. A fairer level of property taxation, which is internationally competitive, will encourage growth and ensure continued business tax revenue.
The BRC recommends the following:
Revisit the business tax road map and commit to further reform
In the road map published before the EU referendum, the Government committed to reform some aspects of business rates, which we welcomed. However, further action is needed for businesses to effectively plan and invest. An important component of an updated road map should be a timetable to gradually reduce the disproportionate burden of business rates and commit to fundamentally reforming business rates alongside the entirety of business taxation.
Freeze 2018 rates and bring forward the switch from RPI indexation to CPI
Given the detrimental impact of a four percent rise based on September RPI on communities, business rates should be frozen in April 2018. From then CPI indexation should be used which is more closely in line with economic circumstances facing retailers. The 2020 switch supported by Government does not come soon enough. It is needed as soon as possible to prevent loss of investment.
Commit to more frequent revaluations beginning in 2020
As has been clear this year, revaluations take place too rarely to flex with economic conditions leading to potentially large increases with little time for businesses to plan ahead. Three-yearly revaluations starting in 2020 would reduce the number of unneeded appeals and be fairer and more closely aligned to economic circumstances. Government has committed to outlining its preferred approach before 2022, but the next independent valuation should take place in 2020.