The Prime Minster yesterday hinted at radical changes to the business rate system. The Government has already announced a £1,000 discount, which will benefit 300,000 retail properties, along with a wide range of investments designed to boost high streets and local economies.
Now it seems that ministers are finally listening to retail and property industry calls for a root and branch review, after David Cameron promised a “fundamental reform” of the system that may even lead to its abolition.
Speaking at a Federation of Small Businesses conference, he put his weight behind a commercial rate shake-up by admitting, “We do need to look at longer term reform.
“It is not going to be easy because rates raise about £24bn and I don’t think there is any one solution that is going to make everybody happy,” added the Prime Minister, “but I think we’ve got to start addressing this issue, particularly this issue about internet retailing and high street retailing.”
Several retail experts are advocating a move away from a tax on commercial property to a modern alternative, such as a sales tax. Many online retailers, however, fear this would cause an imbalance between high street and online retailers.
Helen Dickinson is director-general of the British Retail Consortium (BRC). “The Prime Minister is right to recognise the urgent need for business rates reform,” she said. “The Government has promised a discussion document on changing the system in the spring and we are keen to see that published as soon as possible, so that we can engage constructively with this vital work.
“Whether retailers operate online, through physical shops, or through multiple channels, the current system is outdated and discourages businesses from investing in property. Our members are clear that a fundamental change to the system will unlock new investment and jobs across the UK.”
There is already a Government promise on the table with George Osborne agreeing to reform business rates at the next revaluation. On the back of the Chancellor’s pledge, the BRC has hired leading accountancy firm EY to draw up alternatives to the current system with its report expected to be presented to Osborne next month.
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