Fundamentally, business rates are a millstone around the necks of our members. For every £1 paid in Corporation Tax, retailers pay £2.41 in business rates. This is an enormous tax on simply being in business, not a tax on profit. Survey after survey conducted with the Booksellers Association membership shows that business rates are consistently among our members’ main concerns.
The budget this March did produce some reforms to business rates, which we welcome. We are pleased that around 40% of our membership will either not pay business rates, or will be in a reduced band. This follows on from the government’s announcement that a business assessed at under £12,000 will be exempt from future business rates, and one assessed between £12,000–£15,000 will receive tapered relief.
We also welcome the government’s commitment to more frequent reviews, a simpler appeals process and a change in the method of computation. However, business rates remain a problem for more than half of our members. It is a heavy, burdensome tax that has increased dramatically in the past 20 years. What makes this fundamentally unfair, wrong and plain unjust is the way business rates operate. It is a 20th-century tax on bricks-and-mortar businesses that takes no account of the 21st century. It hammers physical businesses while being, in comparison, extremely light on internet retailers. Amazon is able to pay a fraction of the costs of our members, and reap a huge commercial advantage.
Conservative MP Richard Fuller made this point beautifully in an evidence session of the Business, Innovation & Skills Select Committee Digital Economy Enquiry in March, stating that Waterstones pays 16 times what Amazon does per square metre and adding of the physical chain retailer: “I hope anyone in Bedford today will go look and purchase a book there.” Fuller showed up, in stark, explicit terms, the anti-competitive nature of this tax. How on earth is this fair? How does it enable real competition? It is a grossly unfair tax that distorts competition and gives a huge advantage on a plate to Amazon and its way of doing business.
Business rates as presently constituted present a real threat to our members. It is both a huge tax burden, and anti-competitive. The BA will be continuing to raise this issue on behalf of our members.
Giles Clifton is the BA’s head of corporate affairs.