Business rates have gone up by over ten per cent in the last two years, and they’re set to see another steep increase in April 2013.(1)
Rates are currently translated directly from September’s Retail Price Index (RPI) figure. This year’s figure was 2.6 per cent, so that would add over £600 million to businesses’ bills next year. We fear that a third successive steep rise during a time of relentlessly tough trading conditions and low consumer confidence would pose a serious threat to investment, job creation and economic recovery.(2)
Another substantial rates hike means bad news for all businesses, and it would hit retailers particularly hard, as they pay 28 per cent of all business rates.(3) That will mean more empty shops and fewer jobs, especially for young people.(4)
If it’s serious about supporting growth, investment and job creation, the Government needs to freeze business rates in 2013, and review the system for setting them to ensure that it is affordable and fair for the future.(5)
We're sure you appreciate the importance of preserving our high streets,(6) encouraging investment and supporting local businesses, and we hope that you will lend your support to the campaign to freeze business rates in 2013 by using this website to contact your own MP.
1) Yes, according to the PSFD, Business Rates receipts have gone up from £23.6 bn to £26.2 bn.
Over the same two years, PAYE (income tax and NIC) has gone up from £227.8 bn to £238.2 bn. VAT (at least two thirds of which is borne by the supplier/producer) has gone up from £86.3 bn to £102.0 bn, and (onshore) corporation tax has gone up from £35.7 bn to £36.8 bn (despite the rate going down slightly).
So they don't want you to trouble your pretty little heads with the extra £27.2 bn in taxes on employment, output and profits (which 'hard working families' and small businesses have to pay), what they want you to worry about is the extra £2.6 bn borne by landowners on their monopoly/windfall profits.
2) See (1). What's their point?
3) So? Retailers in town centres occupy relatively little land by area but a huge chunk by value, so they pay rates accordingly.
4) That's the point, it will do exactly the opposite, even if there are no corresponding cuts in VAT or NIC (the worst taxes). Business Rates on vacant premises are payable by the owner and are supposed to be about thirty per cent of the rent he could collect (gross of rates). So the landlords will have no difficulty in collecting enough rent to cover the tax bill, all they have to do is get a tenant in, even if that means dropping their rent by half. And if they want to get higher rents, all they have to do is refurbish their premises, y'know, actually invest in their assets to get the best overall return, just like everybody else.
For sure, there are also owner-occupier businesses, if they can't even make enough money to cover the business rates, then clearly they have a crap business and could make more money by becoming landlords themselves, it's called 'notional costing' or 'creative destruction' and that is something even more fundamental than the design of the tax system. All Business Rates does is turn notional costs into real costs, thus focussing people's attention a bit.
5) Complete and utter lies, see above.
6) Probably the biggest lie of all.
For a start, Business Rates are levied on out-of-town shopping centres in exactly the same way as on urban High Streets, so what is their bloody point? A freeze in Business Rates would using their twisted logic and all things being equal, benefit out-of-town shopping centres more than 'the High Street'. Are perhaps "small local shopkeepers" being used as a human shield by the large commercial landowners, the same as the large residential landowners constantly wheel out the Poor Widows In Mansions?
The whole High Street vs out-of-town shopping centres argument has little to do with the tax system*. everything to do with availability of parking space. The fact is, "the UK High Street" is alive and well, it is just that it has been recreated from scratch in comfortable, convenient three-storey buildings with hundreds of shops, surrounded by oceans of secure parking space, instead of being scattered about more or less at random with all the duplication and lack of choice that entails.
Surely it cannot be beyond the wit of mankind to have seen this coming and to have built more car parks/good access roads, or indeed decent public transport links, in or near town centres and to knock down some of the higgledy piggledy old buildings and got rid of awkward junctions and crossings etc and have proper pedestrian precincts with two or three storeys of decent sized retail space or smaller shopping malls on either side?
I know that plenty of such places exist because I've been there, it is do-able.
* For sure, developers prefer starting again out-of-town because the land is cheaper, but also because it is nigh impossible to assemble a decent sized site in town because of precious historic listed buildings and the landowners holding out for ransom value, all of which LVT would sort out better than anything else.
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