Retailers urge chancellor to reform business rates system

By Liz Wells in Industry News 8th February 2021

Supermarkets including Tesco, Morrisons and Asda have called on chancellor Rishi Sunak to use the upcoming Budget, on 3 March, to commit to reform of business rates to reduce the burden on shops and businesses.

The chief executives of 18 companies and groups have written to the chancellor warning that a return to the old system “will hamper the recovery of the retail sector post-pandemic, potentially putting thousands of jobs at risk”.

The letter makes the following specific recommendations:

Reducing the business rates multiplier: The multiplier has risen from 35% in 1990 to over 50% today. The retailers believe it should be significantly reduced, focusing on a level closer to the original rate of about 35% of the market rent.
Level the playing field on tax: Currently, online retailers pay a lower proportion of tax per sale than bricks and mortar retailers. The retailers are urging the government to rebalance the tax base to ensure online and bricks and mortar retailers pay a similar proportion of tax.

ACS chief executive, James Lowman, said: “It is essential that the government balances the business rates system to ensure that physical retailers aren’t disadvantaged compared to their online-only counterparts, and can invest in improving their stores without having to face higher business rates bills as a result.

“In the coming months we will be approaching a critical time in the nation’s recovery from Covid-19. During this time, it’s crucial that local shops are given as much notice as possible to plan ahead so that they can continue to serve their communities. We are calling on the government to reintroduce business rates gradually and not as a sudden shock that could put local shops, especially those on high streets and in town and city centres at risk.”

In addition, Usdaw has renewed its call for an online sales tax as part of its Save our Shops campaign.

Paddy Lillis, Usdaw general secretary, said: “There must be fundamental reform of business rates. Retailers need clear and decisive action from government to make this outdated and imbalanced commercial property tax fairer. An online sales levy set at 1% would raise around £1.5bn, which could fund a cut in retail business rates of around 20%.

“Retail is crucial to our town and city centres, it employs around three million people across the UK. The government must take this seriously; we need a recovery plan to get the industry back on its feet.”