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Retailer body warns of business rates stealth tax

03
Dec '08
Some local authorities could use the Business Rate Supplementary (BRS) Bill powers, announced following the Queen's Speech today (Wednesday), to saddle retailers with new tax costs when they can least afford it, warns the British Retail Consortium (BRC).

For the first time in almost twenty years local authorities will be given the power to raise revenues directly from businesses. With retailers already paying more than any other sector in business rates, the supplements would add an extra £160 million a year to their tax bills.

The BRC has consistently opposed the BRS proposals, urging the Government to ensure there are sufficient safeguards to ensure local authorities only use the tax to pay for genuinely business-boosting infrastructure projects, not simply to fund general expenditure.

The BRC is especially disappointed additional safeguards have not been introduced in the Bill, including failure to deliver a compulsory business vote before the introduction of any BRS
A clear framework to hold local authorities to account in developing and implementing BRS proposals

Stephen Robertson, BRC Director General, said: “At a time when retailers are being hit by rising costs and falling sales, this Bill gives local authorities the power to clobber businesses with a hefty new stealth tax.

“Retailers already pay £5 billion a year in business rates – more than any other sector – and BRS would see them forking out an extra £160 million a year. When you combine this with an onslaught of other property cost increases, including the 2010 Rates Revaluation and the end of Empty Property Rate Relief, this is another burden on retailers when they can least afford it.

“Retail's responsible for 3 million jobs in the UK. It is vital to local economies, to regeneration and communities. As we head into recession the Government should be reducing the burdens on retailers, not compounding them.”

Alex Gourlay, Managing Director Boots UK, said: “This is the wrong tax at the wrong time. It will simply lead to increased costs for retailers at a time when the sector's margins are already being squeezed by a wide range of additional property costs and trading conditions are challenging for the sector.”

Lucy Neville-Rolfe, Corporate and Legal Affairs Director at Tesco, said: “Businesses that are property dependent, including retail, are facing into the worst recession for many years. It is very unfair that rates for next year will increase by 5 per cent as they are based on September 2008 figures when inflation was very high.

Retailers will also suffer from the pending revaluation which was conducted in early 2008 when property prices were much higher. Government must act now to ease this triple whammy of large increases in business rates, a revaluation done at the height of the property market and the added threat of supplementary business rates."


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