The retail sector is overtaxed compared to other sectors of the economy in the UK putting over 17,000 high street shops under threat over the next decade, new research by the British Retail Consortium (BRC) has revealed.
Retail pays 7.4% of all business taxes amounting to £33bn, a share 1.5 times greater than its share of the overall economy (5% GDP).
BRC research said this bill amounts to 55% of the industry’s pre-tax profits which is the highest proportion of all main business sectors, along with hospitality.
Eleven per cent of the total tax bill is made up of business rates, the highest percentage of all business sectors.
The BRC found this tax burden had a stark effect on the high street as the UK lost 6,000 shops in the last five years. In two-thirds of these closures, business rates had a material impact on the decision-making process.
Up to 17,300 shops could close over the next decade if no action is taken on business rates.
The findings come as the BRC puts forward its submission to the autumn Budget, which calls on the government to introduce a 20% retail rates corrector – a 20% adjustment to bills for all retail properties.
This would meet the government’s manifesto commitment to reform the business rates system and to restore declining high streets.
BRC chief executive Helen Dickinson said: “Our research conclusively proves what retailers have known for years: the industry is paying far more than its fair share of tax. The impact of this is clear to see on high streets across the country, with shops shut, jobs lost and a social as well as economic cost. The rates bill also means missed opportunities as other investments, which would drive growth in the longer term, don’t happen.
“The chancellor has a golden opportunity to fix this and use the scale of the industry to help deliver some of the government’s priorities. Introducing a 20% Retail Rates Corrector would be a decisive move that levels the playing field between different sectors of the economy and is the best way to achieve the government’s commitment of a tax ‘fairer for bricks-and-mortar businesses’. It gives an immediate return allowing retailers to move further and faster with investments that play a critical part in driving growth, and in restoring our high streets right across the country.”
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