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The Booksellers Association has warned the government must “act fast” to secure the high street’s future as the organisation welcomes a report into the state of the high street, urging the government to raise taxes on online businesses.
The report has been published by the Housing, Communities and Local Government Committee. The BA submitted written evidence to this Select Committee Inquiry, calling especially for a level playing field to operate between online and physical retailers and the main requests put forward by the BA are supported.
The published report warns city centres are in danger of becoming ghost towns and urges the government to raise taxes on online retailers such as Amazon, and calls for lower business rates and more regeneration in town centres.
BA m.d. Meryl Halls said: “The report sets out some perceptive questions and comes up with well-informed and thoughtful suggestions for the Government to consider, including a specific ratings methodology for the warehouses of online retailers; reinventing business rates and other business taxes for and possible green taxes on deliveries and packaging. But the Government has to act fast, and think creatively, to secure a vibrant future for high street retail and consumers – as well as to give thought leadership for ways in which we can adapt to contemporary consumer behaviours.”
The committee found high streets and town centres must adapt, transform and find a new focus in order to survive and warns business rates are “stacking the odds against high street retailers”.
Halls added: “We know how catastrophic business rates’ costs can be to small businesses – only this week a new, vibrant creative bookshop in Pinner has been hammered with huge and potentially ruinous increases in rates – this less than six months into their entrepreneurial journey to enhance the high street in Pinner. It’s heart-breaking and infuriating. And it’s not just small bookshops affected – the small business rate relief from last year will lift many small businesses out of rates, and the third discount off business rates’ bills during the next two years for those businesses that have a rateable value below £51,000 is extremely welcome. But those just over the £51k threshold - and our bigger, chain members – are left shouldering the burden of an inappropriate tax.
“One of the pleasing things about the report is its highlighting the difficulties retailers often have with landlords, and it calls for upward only rent reviews clauses to be outlawed and for a more collegiate approach. It’s not only in rent negotiation that it’s important – the best situations are where there is an ongoing, positive dialogue between retailer and landlord, and all too often our members are struggling with absentee landlords and uninterested ones.”
The committee calls on the government to initiate reform in key planning and taxation areas, including the options of an online sales tax and reforms to business rates, to allow high streets to adapt to changing demand, and compete with online retailers such as Amazon on a level playing field.
The report added retailers must accept the need to adapt and do more to offer what online cannot, focusing more on personal interactions and convenience. The report calls out the government for “not … addressing the imbalance between online and high street retailers”, citing the Chancellor’s touted ‘Digital Services Tax’ in the Autumn Statement as needing "to go further".
Landlords also need to recognise the retail property market has changed and be more receptive to negotiating lease terms with retailers in financial difficulty – The government should consider providing a conciliation service to facilitate negotiations between the parties, said the committee.
In the wake of revelations last month that, despite recording annual turnover of £8bn in the UK, retail giant Amazon pays just £63m in business rates - the proportional equivalent of 0.79% of its takings - a number of indie booksellers revealed their business rates bills are proportionally higher than Amazon amid calls for major reform of the system.
On the issue of business rates, Amazons says: “We pay all taxes required in the UK and every country where we operate. In May 2015, to ensure we had the best business structure to serve our customers going forward, we established a local country branch of Amazon EU Sarl in the UK, with all retail revenues, expenses, profits and taxes due now accounted for in the UK.”