'Extra tax burden wrong under present circumstances' - BRC

20 Nov '08

3 min read

Retailers' viability and retail jobs will be put at risk if the Government continues to increase costs as trading conditions worsen, warns the British Retail Consortium (BRC).

Updating its submission to the Chancellor ahead of next week's Pre-Budget Report (PBR), the BRC is today (Wednesday) warning that 'fiscal stimulation' should not be confined to cuts in personal taxation because businesses need help too.

Retailers are on the verge of being hit with a series of substantial business rate increases. These will come at a time when their margins are being squeezed dangerously by tough trading conditions.

Next April's Business Rates increase would normally be based on this September's five per cent RPI. But no RPI has been higher since July 1991 and RPI has already fallen sharply.

And, a year later, retailers face a huge 16 per cent cumulative increase in Business Rates liability as a result of the 2010 Revaluation. This compares with increases of 3.1 per cent for office occupiers and 1.5 per cent for industrial occupiers.

Stephen Robertson, British Retail Consortium Director General, said: “Personal tax cuts are not the only form of 'fiscal stimulation' needed. The Government should revise its plans to batter retailers with a range of extra burdens which can only increase the pressure on them and ultimately push up shop prices.

“Conditions are tough for customers and retailers and they'll be tougher through 2009. Our latest Retail Sales Monitor shows like-for-like sales have now fallen in seven of the last eight months. Eighty-five per cent of customers believe we are already in recession and are reining in spending to match.

“Retailers are crucial to jobs, customers and communities. In recession our role is even more important. Government should be helping, not hindering. The Chancellor must use the Pre-Budget Report to reduce present and future costs.”

The BRC is calling on Alistair Darling to ensure:
-Reduced local tax burden, An affordable increase in business rates in 2009 – not one based on September's, seventeen-year-high, RPI inflation of 5 per cent;
-No extension of local tax raising powers, such as Business Rate Supplements (BRS);
-The re-introduction of Empty Property Rates Relief, which was abolished in April;
-Postponement of the Business Rates Revaluation, currently planned for 2010.

Stephen Robertson, BRC Director General, said: “Business Rates penalise retailers simply because they use a lot of property. The Treasury's own analysis shows retail pays 27 per cent of the tax but makes up only 11 per cent of businesses. With tough trading conditions getting tougher, it's vital that the burdens on hard-pressed retailers are not increased further.

"Abolition of Empty Property Rate Relief is adding substantial extra costs. Business Rate Supplements will pile more on top. Next April's business rates increases and the expected enormous increases coming from Rates Revaluation in 2010 would only make things worse."

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