Why the coalition must freeze rates on retail premises

THERE IS nothing sexy about business rates. They don’t have much globe-trotting glamour and perhaps that’s part of the problem. As taxes go, they’re more a cup of tea than a café au lait.

One of the government’s flagship business pledges is to make the UK the most competitive tax regime in the G20. It’s a great ambition – but one that has put much of the focus on internationally mobile companies that can move their capital from country to country.

The end result is corporation tax cuts – down from 28 per cent in 2010 to 24 per cent now, and heading for 22 per cent by 2014. It’s very welcome progress. But high street taskforces and warm words can’t obscure the government’s failure to do anything similarly positive with dull, old, hard to escape business rates.

Remember, corporation taxes are levied on profits, so little is paid in lean years. But business rates fall on property and rise relentlessly regardless of company results. They’re even paid on empty premises.

The convention is to base each April’s annual increase on the previous September’s retail price index inflation figures. That means business rates rose dramatically in both 2011 (4.6 per cent) and 2012 (5.6 per cent), adding more than £500m to retailers’ rates bills. The threat is now a further 2.6 per cent increase next year, which would hit the sector with another £175m in new costs.

I accept the that government needs to bring in revenue – rates are the third largest business tax, and property is an easy target because it can’t move or hide. But that’s missing the point. Increasing business rates hits investment too.

We recently conducted a snapshot survey of retail chief executives employing 900,000 people, and representing 32 per cent of the UK retail market. It showed that 70 per cent fear a rates increase would force them to cut back on job creation and investment in new or existing stores. And 15 per cent said it would even force them to close stores.

That’s why we’re asking everyone with a stake in successful retailing to join us and Retail Week in calling for fair rates for retail. The government should accept that retail has already shouldered more than its share of increases. It should freeze business rates in 2013, and bring in a fairer formula for the future.

This week, we’re stepping up the campaign. By joining with the TaxPayers’ Alliance, we’re urging everyone who wants to stop high taxes from thwarting growth to write to their local MP asking for support.

Regardless of party, MPs who care about local jobs and communities will recognise the importance of their high streets and the need to take action to prevent more retailers failing and premises from falling empty.

Politicians should support our campaign because the employment and services that shops provide are spread across every constituency in the UK. The damage will be widespread if they fail to act.

Stephen Robertson is director general of the British Retail Consortium. Visit www.freezebusinessrates.org to sign up to the campaign.