ACS: Business Rates System Needs Rebalancing to Encourage Investment

ACS has responded to Chancellor Philip Hammond MP’s comments in a letter to the chair of the Treasury Select Committee, urging the Chancellor to look again at ways to incentivise investment.

In the letter, the Chancellor set out the Government’s intention to keep the calculation of business rates as it is, stating that there was ‘no consensus on an alternative base’ for the calculation of rates bills. However, Mr Hammond acknowledges that the Government needs ‘to find a better way of taxing the digital economy’.

Speaking in response to the letter, Treasury Select Committee chair Nicky Morgan said: “It’s clear that many bricks and mortar stores are struggling to remain competitive against online retailers, with the Chancellor admitting that business rates can represent a high fixed cost for some businesses. The Treasury Committee is increasingly concerned with the financial burden that business rates are placing on high street businesses, and has examined the issue in its inquiries into VAT and the VOA. We are likely to scrutinise business rates further as part of our Autumn Budget inquiry later this year.”

ACS chief executive James Lowman said: “The current business rates system penalises retailers who invest in and improve their stores in the communities where they trade, while rates bills for large online distribution warehouses remain comparatively low.  The Chancellor is again recognising there are problems with the rates system, but we urgently need real change to rebalance the rates system, help high streets and local shops, and encourage businesses to change and invest.  The time for warm words has long passed.” 

During a Westminster Hall Debate on the business rates system in June, several MPs including All Party Parliamentary Small Shops Group chair Ruth George MP raised concerns about the impact of rates bills on convenience retailers. In the debate, Ruth George MP highlighted the inequalities in the method used to calculate business rates, noting that the current turnover based methodology unfairly targets forecourt retailers as well as retailers operating free to use cash machines.

In submissions to Government, ACS has repeatedly called for a change in the business rates system to incentivise investment instead of penalising retailers that improve their stores. Since the last revaluation, around one in three retailers have seen an increase in their business rates bills with some stores seeing increases of over 100%.

Coverage of the story featuring ACS in the Daily Mail is available here

This entry was posted by Chris on Fri, 06/07/2018 - 08:45