BRC: Autumn Budget Is ‘Golden Opportunity’ For Rates Reform

New research, unveiled today [13th September] by the British Retail Consortium (BRC) in its Budget submission, shows that the retail industry is overtaxed compared to other sectors of the economy.

Retail pays 7.4% of all business taxes (£33bn), a share 1.5 times greater than its share of the overall economy (5% GDP). This bill amounts to 55% of the industry’s pre-tax profits, the highest proportion, along with hospitality, of all main business sectors. Of this total tax bill, 11% of profits is made up of business rates, the highest of all business sectors.

The effect of this tax burden is stark, with shuttered shops and declining high streets in every corner of the country. This was recognised in Labour’s election manifesto which stated “The current business rates system disincentivises investment, creates uncertainty and places an undue burden on our high streets.” The UK has lost 6,000 shops in the last five years: in two-thirds of these closures, business rates had a material impact in the decision-making process. Without action, up to 17,300 shops could close over the next decade.

More widely, it is holding back investment in pay and upskilling for colleagues, and in the technology that will boost productivity, support decarbonisation, and drive economic growth.

The findings come as the BRC puts forward its submission to the Autumn Budget, which calls on the government to introduce a 20% Retail Rates Corrector – a 20% adjustment to bills for all retail properties. This would meet the government’s manifesto commitment to reform the business rates system and to restore Britain’s declining high streets, and would immediately unlock investment and growth, another priority for the government.  

Helen Dickinson, Chief Executive of the British Retail Consortium, said:
“Our research conclusively proves what retailers have known for years: the industry is paying far more than its fair share of tax. The impact of this is clear to see on high streets across the country, with shops shut, jobs lost and a social as well as economic cost. The rates bill also means missed opportunities as other investments, which would drive growth in the longer term, don’t happen.

“The Chancellor has a golden opportunity to fix this and use the scale of the industry to help deliver some of the government’s priorities. Introducing a 20% Retail Rates Corrector would be a decisive move that levels the playing field between different sectors of the economy and is the best way to achieve the government’s commitment of a tax ‘fairer for bricks and mortar businesses’. It gives an immediate return allowing retailers to move further and faster with investments that play a critical part in driving  growth, and in restoring our high streets right across the country.”

Source : BRC

Image : Dilok Klaisataporn / iStockphoto.com / 1414982888

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