A coalition of leading retailers and trade bodies has launched a ‘Cut the Shops Tax’ campaign, arguing for a business rates reduction to combat inflationary pressures and protect industry jobs.

The retailers – the Co-op, Greggs, B&Q owner Kingfisher, Morrisons, Sainsbury’s, Tesco and Waterstones – also said they would be “open” to an online sales tax if it funded a reduction in rates.

The group, operating under the banner of the Retail Jobs Alliance and including trade union Usdaw, the British Independent Retail Association, the Association of Convenience Stores and property group RivingtonHark, has written to chancellor Rishi Sunak to argue the case.

They wrote:  “Business rates – the ‘shops tax’ – are a significant part of retailers’ overheads. A meaningful cut in the shops tax would make a big difference to retailers’ ability to invest more in the shops and stores that we know customers value, as well as to create jobs. This would make it easier for everyone in the retail sector to mitigate inflationary pressures, keep existing shops open and open new ones.”

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Sunak is consulting at present on a possible online sales tax (OST). The alliance wrote: “We welcome the commitment that any OST would be used to fund reductions in business rates for retailers. This would help to level the playing field between online and bricks-and-mortar retailers at a time when Covid-19 has accelerated shifts in retail which were already in evidence before the pandemic. 

“One recent report suggested that half of all non-food sales will be made online by 2025 and yet physical shops are taxed far more heavily than this newer and rapidly-growing part of the retail sector.”

The alliance will lobby on the issues until the autumn Budget and publish research on the impact of rates in the coming months.

Political and economics consultancy WPI Strategy is providing a secretariat to the group. Its research found the burden of business rates is “highest in the places most in need of ‘levelling up’, which are also the places with the highest retail vacancy rates”.

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