At a time when around 10% of retail sales are now made online, the world of retailing has irreversibly moved on, but many retailers continue to be frustrated by the outmoded taxes and regulations from a bygone era.
Against this backdrop, we are delighted to see the Chancellor in his Autumn Statement recognise that business rates need a complete review and look forward to working with the Government on developing a viable and suitable alternative for retailers of the 21st century.
In the meantime, the 2% cap on business rates is a partial relief for some retailers for the short term. However, we need commitments now in all the political party manifestos next year to see some real modernisation of the system.
As most of those reading this column will know, one of the biggest financial constraints facing retailers today is business rates – the inexorable rise in bricks and mortar taxes linked to the Retail Prices Index (RPI).
This ever-rising tax has major implications on our long-term investment plans, exacerbated by the delay in the revaluation of premises from 2015 to 2017 – which will leave many retail chains continuing to pay rates based on peak 2008 values (when the last valuations were made), while providing no foresight on what the rateable value will be in three years’ time – the normal business planning cycle.
Business rates affect the forthcoming investment decisions of shopkeepers of every shape and size – in some cases meaning they curtail a store expansion programme or reduce shop floor space. As a last resort, the rising costs may even mean they have to shut up shop.
Retailing accounts for three million jobs in UK plc and all the resulting benefits for the Treasury. Retail provides many young people with their first job, but they are often also apprentices learning vital retailing skills, whether that is in merchandising, design, accounting or supply chain, and very often go on to set up their own retailing businesses.
Retailers are the keystone of many towns around the UK, driving footfall to the population centres. The best way for the retail sector to genuinely solve the structural tax issues is to consistently support the British Retail Consortium’s proposal to work with the Government to find a financially viable long-term solution to reforming the business rates as a core part of revitalising the nation’s high streets.
A last thought on this is to identify more clearly how the business rates raised locally are invested in the towns and villages around the UK and to increase the proportion that is spent directly in the areas from where they are collected.
12 December 2013 | 10:26 |