Business rates reform backed by majority of MPs ahead of general election

The British Retail Consortium (BRC) has found 80% of MPs believe the current system is ‘not fit for purpose and in need of fundamental reform’, while 93% agree that ‘reform of business rates is an important area for the future success of the high street and town centres’.

With just 10 months to go until the general election, the BRC is calling on political parties to commit to a total reform of the burdensome business rates system, which retailers complain are restricting investment and job creation.

Despite the fierce criticism of the system the current Government has said it won’t consider long-term reform until after 2017 when the next revaluation takes place.

BRC director-general Helen Dickinson said: There is now much more consensus about the significance of the reform needed and we have moved beyond the idea of tinkering with the existing system.”

“We believe that parties who are prepared to accept the need for more than just tweaking the system will win broad support from businesses across industries. Those who seek a competitive tax regime as a draw for investment and jobs should apply that logic to business rates.”

Sainsbury’s finance director John Rogers said: “There has been a groundswell of support for reform and we need to ensure political parties make a commitment.”

He said that MPs should recognise that reform is also in their constituents’ interests as it will boost employment and protect town centres, keeping them at the centre of the community.

The BRC said after discussions with the pub and manufacturing industries there was strong consensus that “significant reform” is needed.

The BRC believes the principles of fundamental reform centre on reducing the overall burden on the retail sector, which pays a disproportionately high share of business rates – paying 48.2p in the pound against 34.8p in the pound in 1990. Any new system must flex to the economic climate, away from the current RPI and away from a property-focused tax to a new system based on a measurement such as Gross Value Added. It will also be fairly spread across industries and include incentives.

The BRC is also proposing to take small businesses out of the tax all together.

Rogers added: “We are looking for a tax system for the 21st century.”

The BRC laid out its four alternative business rates systems earlier this year which included one linked to energy usage.

The Treasury has begun an administrative review to try and improve the rates system.

High streets minister Brandon Lewis said: “The Government’s long-term economic plan is supporting business, local shops and the high street with taxes which are lower and more efficient.

“Looking forward our business rates review is considering options for longer-term administrative reform of business rates after 2017 that balance the need for the system to deliver simplicity, fairness, stability and predictability to ratepayers.”