Earlier in the year, we wrote a blog on the proposed government review of business rates that was set to shake up the commercial property tax system. Unfortunately, it does not appear as though any significant changes are on the way for retailers.
Talks between the Treasury and retailers to revamp business rates have been considerably slowed down, the Guardian reported, so much that industry sources said they were “extremely concerned by the lack of ambition” of the government and “patience is running out across the business community”.
Mike Spicer, director of research and economics at the British Chambers of Commerce, said that voices in the Treasury suggested not to “get your hopes up, there is not going to be any change”.
Why business rates are in need of review
The current (and controversial) property tax makes the Treasury more than £25bn a year, and has been due for a review since George Osborne promised to do so last year.
Retailers fear that today’s rates are damaging high streets as they are based on outdated property valuations and not on business revenue. The rates could be corrected by either valuing property regularly, or basing it on the economic output of a business.
Revamped business rates could help fund the new national living wage
New business rates could help fund the introduction of the new national living wage, which was announced during the summer budget in July and is set to reach £7.20 in April 2016.
Even large companies have been said to be struggling to pay the new minimum wage and they warned that they might need to increase prices or cut employee numbers to keep up with legislation.
At what stage is the promised review?
The British Retail Consortium said that retailers supported the Treasury’s decision to conduct a ‘radical’ review of business tax rates, but “we are all looking for some sign that the government intends to keep to the spirit in which the review was announced”.
A Treasury spokesman said that that the review is “considering the impact of business rates on the retail sector as part of the ongoing business rates” and “will be complete by the end of the year”.
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