Britain’s biggest retailers have joined forces in an open letter to the Chancellor Rishi Sunak calling for a reform of the controversial 25% business rates tax.
Ahead of the Budget announcement, 17 bosses from across retail, headed by supermarket chains and beauty sellers Tesco, Asda and Morrisons, representing hundreds of thousands of employees, have called on the government to reduce the burdensome tax on the country’s already struggling high streets.
During the Covid-19 pandemic, businesses have been eligible for a business rates relief for the 2020 to 2021 tax year if their stores have been forced to close.
However, physical retailers want to level the playing field between online, which pay a lower proportion of tax per sale than bricks-and-mortar.
“Reducing business rates for retailers and rebalancing the tax system to ensure online retailers pay a fair share of tax would be revenue-neutral, provide a vital boost to bricks-and-mortar retailers and support communities in need of levelling up,” the letter wrote.
Retailers are the highest paying sector of business rates, which amount to £8bn of the £30bn paid to the Treasury each year.
The bosses are also urging the government to reduce the multiplier for business rates, which stands at more than 50% today, an increase of 15% since 1990.
But businesses want to see the multiplier reduced to around 35-40%.
- Retail bosses demand overhaul of “broken” business rates
- Hope for the UK high street as Chancellor announces cuts to business rates for small retailers
- Retail experts warn third England-wide lockdown could be ‘one too many’ for businesses
Calls to overhaul the ‘broken’ business tax, is no new plea from the retail sector.
In 2019, retailers including Harrods, Marks & Spencer and Sainsbury’s teamed up with more than 50 major retailers in a letter to the then Chancellor Sajid Javid calling for similar reforms.
Coordinated by the British Retail Consortium’s CEO Helen Dickinson, the pressure was not enough to change the government’s stance on business rates.
Meanwhile, in 2020, Mike Ashley’s retail firm Frasers Group, the owner of beauty and fashion department store chain House of Fraser, said that UK’s delay of a business rates review to 2023 had “kicked businesses when they are clearly down”.
Since the Covid-19 pandemic hit, it has been a blood-bath for high street chain retailers.
The closure of non-essential retail contributed to the loss of more than 158,000 jobs in the UK in 2020, reported the Centre of Retail Research.
Another 13,000 jobs have been put at risk from the collapse of Sir Philip Green’s Arcadia group, after falling into the hands of lenders last year.
“There must be a fundamental reform of business rates,” added Paddy Lillis, General Secretary for trade union Usdaw.
“Retailers need clear and decisive action from government to make this outdated and imbalanced commercial tax fairer.
“An online sales levy set at 1% would raise around £1.5bn, which could fund a cut in retail business rates of around 20%.”
He added: “Retail is crucial to our towns and city centres, it employs around three million people across the UK.
“The government must take this seriously; we need a recovery plan to get this industry back on its feet.”