Our high streets still need help… A £5 billion rates reduction to help high street businesses, financed by a fairer tax on online business. Solve business rates inequality now.
Paul Clarke, Chairman Bournemouth Coastal BID and Cluster Manager Bournemouth Hallmark Hotels, summarised: “At the last meeting of the All Party Parliamentary Group (APPG) of Town Centres in Westminster’s House of Commons, Bournemouth Coastal BID supported New West End Company’s representation for business rates reform, financed by fairer tax on online businesses. Of all the discussion papers I have seen for business rates reform over the years, the New West End Company’s proposals are the most practical and are well worth consideration by the chancellor to be included in his budget 2018.”
High business rates area severely damaging Britain’s high streets and holding back change.
According to the British Retail Consortium, retailers account for 6% of GDP but pay 26% of business rates.
- Online businesses currently pay just one tenth of the business rates paid by high street businesses:
In 2017 Marks and Spencer paid £184 million in business rates, with revenue of £9.6 billion. Amazon, with revenue of £7.3 billion in the UK, paid around £14 million[1]. If Amazon had paid the same proportion of their revenue as M&S; Amazon would have paid £140 million.
- A 1% tax on online businesses could raise over £5 billion to ease the business rates burden faced by High Street Retailers
This would allow the government to cut business rates for by an average 17.5%, at no cost to the Treasury.
- New West End’s Company’s proposal submitted as written evidence to the House of Commons Housing, Communities and Local Government Select Committee high streets inquiry into “high streets and town centres 2030”.
This proposal, authored by Arup and local government expert Professor Tony Travers, recommend replacing business rates with a revenue based tax for businesses that are wholly or largely online
Representatives across all business sectors[2] trading on UK high streets
- Urge the Government to implement a business rate reform which would eliminate inequality between high street and online retailers and boost the high street with a £5 billion cut in their rates bills
- Call for the introduction of a revenue based tax to replace business rates for online businesses.
- The inequality in business rates is considered a major contributing factor to the rising number of retail and restaurant closures across the UK.
- The proposals new tax would apply only to businesses that are wholly or largely online [80% turnover] so that high street retailers who have a strong online presence are not taxed twice and entice SME’s on the high street to continue embracing online trading
- The proposal are an interim measure with a sunset close when the reform of business taxes reflect the growth of online businesses
Sir Peter Rogers, Chairman of New West End Company said: “Business rates are currently the biggest tax that high street retailers pay, accounting for nearly half [45%] of retailers tax bill. The current structure of business rates, whereby they are linked to the value of occupied property, not economic performance, provides online retailers with an unfair advantage and a 90% rate discount in an already struggling bricks and mortar retail environment. London’s West End is a major contributor to the UK economy with retailers generating over £9 billion in sales a year and employing over 80,000 people, if we do not act now we damage the ability of those business to survive and continue to drive our economy.”
If the chancellor to act in the Autumn 2018 budget
- It will produce a significant reduction for all business rate payers:
- for public services as the NHS, which could save up to £59 million – enough to pay over 2,500 newly qualified nurses
- schools, libraries and care homes
The chancellor is asked to include the proposal in his 2018 budget as an interim measure with a sunset close when the reform of business taxes reflect the growth of online businesses, acknowledging this will take time.
The fairer tax on online business will help high streets to adapt and prosper by levelling the playing field by ensuring that online businesses pay their fair share and contribute to
- Safeguarding businesses
- Protecting jobs for a healthier economy
- Sustaining local communities.