John Webber, Head of Rating at global property company, Colliers International responds to the British Retail Consortium’s (BRC) paper on the reform of the business rates system that were published today:
“We agree with the BRC in that the business rates system is becoming a significant burden to retail businesses. However, the BRC’s suggested reforms are far too narrow and could result in the introduction of an even more complex system than we have already. In three of the four measures they set out in their paper they describe ‘complexity’ as being an area of concern.
“We don’t need a more complex business rates system. We need a re-basing of the total amount raised from Business Rates; a review of an RPI linked taxation model; an embracing of new technology to facilitate more regular revaluations; and a greater appreciation of retailers’ changing business models as trade shifts from brick to clicks. Research shows that retailers in England outside London would have saved £233 million in 2015 and 2016, if the 2015 Rating Revaluation had gone ahead.
“The BRC’s paper talks of an option of linking tax to energy usage. But surely this could lead to a situation where a large multinational coffee shop company, employing hundreds of low salaried employees, who install low energy light bulbs in their shops end up paying very little National Insurance; very little Property Tax; added to an existing low or none existent Corporation Tax bill! Not much help to the Exchequer.
“The existing system is successful for the Exchequer because it’s a property based tax, if you begin to link the tax to other things, like energy use and employee headcount, it will only serve to dilute the effectiveness. And ultimately benefit those that can work they system; leaving small business a looser once again”.
In conclusion, Webber says: “This paper misses the point. It appears to have been written by accountants for accountants and it takes an accountant to make something complicated out of something that could be very simple!”