How can we solve the business rates conundrum ?
Pressures on High Street retailers have once again brought the subject of business rates back up to the top of the agenda. Hard pressed shopkeepers, who do so much to attract customers who drive our local economy, angrily point to online traders who don’t pay so much in business rates and who avoid the cost of maintain expensive physical shop fronts.
They make the reasonable point that being undercut by the internet is unfair and call for a levelling up, perhaps by imposing a levy on purchases made from online sellers. The Treasury has been looking at this, attempting to assess how the system is working at the moment and then working out what kind of reforms could be made.
Unfortunately, that’s where the problems start. An online sales tax is quite difficult to create without over taxing small e-retailers as the big players will be better at avoidance. Then there’s the tricky question about how to tax the likes of Ebay and Amazon without a diplomatic rift with the United States, as France has already found out. Another issue is that the Treasury quite likes the concept of the reliable tax revenue that comes from a property based commercial tax which is quite hard to avoid.
The funds raised from business are vitally important in helping local authorities balance the books and provide a range of much needed services. But the question remains about doing that in a way that is not only fair and reasonable but allows the economy to grow and thus generate even more revenue to help with things like the bill for social care.
There are those who make the case for radical reform but frankly that looks like a lost cause as the Treasury doesn’t look like shifting away from a land tax. However, there is an interesting proposal which is gaining support. This involves keeping the land tax but re-weight the way it is applied.
This would allow a substantial increase in the rates for big logistics warehouses, which are currently very under taxed, and applying discounts for High Street premises. Targeting warehouses is less likely to offend the Americans, be harder for Amazon to avoid and reassure the Treasury that their billions of tax revenue wouldn’t disappear into thin air.
It would be interesting to hear whether there’s much support for the idea of re-weighting business rates, so I’d be delighted to hear views which we can feed in via Business West into British Chambers and so into Government. Contact Ian Bell at firstname.lastname@example.org