Doubts have been raised about how helpful the government’s review of business rates will be given its “terms of reference” which make it clear it will be “fiscally neutral”, meaning the amount the Treasury generates from the tax will stay the same, according to Propel Info edited by Paul Charity.
The review comes as figures from PwC show the decline in town centre shops accelerated three-fold last year, with 987 net closures compared to 371 the year before. Overall closures of 5,839 were equivalent to 16 a day, with an increase in business rates said to be a key factor in shops shutting.
The Association of Licensed Multiple Retailers (ALMR) has called for the review to introduce a more flexible system that does not penalise success.
Chief executive Kate Nicholls said: “We are pleased to see the government taking this review forward as a matter of priority ahead of the General Election and committing to a strict timetable to implement long overdue change. The current system of rates is no longer fit for purpose. It has gone from being a tax on business to a tax on property occupation and it therefore places disproportionate burdens on high street casual dining, pubs and small businesses in particular. The ALMR has repeatedly called for a root and branch reform of a business rates system that currently sees pubs and bars paying 15p per pint in rates compared to about 1p per pint in supermarkets. The UK’s high streets are more highly taxed than any other property market in Europe and this is clearly stifling investment. Currently, the calculation of rental values is not responsive enough to provide up-to-date information. We need a much more flexible system with more frequent revaluations, which is linked to annualised CPI and which has safeguards built in so as not to penalise success or over-performing operators.”
However, Jerry Schurder, head of business rates at property agent Gerald Eve, told The Daily Telegraph: “Given this review was first announced more than three months ago in the Chancellor’s Autumn Statement, hard-pressed firms are well within their rights to ask the Treasury what has taken it so long, especially since all the government is doing is asking more questions rather than offering solutions? The timing of this announcement appears to be little more than a cynical attempt to appear to be tackling a vital issue in the run-up to the election, without having to do anything at all to actually address a tax that is crippling businesses throughout the country. The government is hell bent on protecting the revenue generated by business rates and is again kicking the critical issues into the long grass, showing no real desire for systemic reform.”