The Booksellers Association has welcomed the launch of a “radical” review of the business rates system in the UK.
The government revealed today (16th March) that the review had begun and would report back in time for the 2016 budget.
"The time has come for a radical review of this important tax. We want to ensure the business rates system is fair, efficient and effective," said Danny Alexander, chief secretary to the Treasury.
The review was first announced last December in the Autumn Statement by Chancellor George Osborne.
However, the outcome is expected to be fiscally neutral, meaning that the total sum collected from businesses will not change. Business rates bring in roughly £25bn for the Treasury every year.
Rising business rates is a major issue for high street booksellers – from independents to chains – with many seeing it as an extra unfair tax which online rivals are not subject to. Meanwhile many others have blamed it for their businesses' closure.
Last September, 100 firms including Waterstones, WH Smith and Foyles called for the overhaul of the business rates system, calling it a "critical problem."
Tim Godfray, c.e.o of the Booksellers Association, said today (16th March): “Business rates are one of the key issues facing our members, so we are pleased to see that the coalition government accepts that the current business rates’ system, operating since 1988, needs fundamental reform. We very much welcome the coalition government’s reiteration today that it will carry out a wide ranging review to examine the structure of the current business rates’ system in England.”
He added that this was a specific request the BA made to HM Treasury and the Department of Communities and Local Government in its submission in connection with the Administration of Business Rates at the end of February.
Godfray has previously called for the scrapping of business rates altogether for small companies and asked for the review to ensure any changes would come about no later than 2016.
Helen Dickinson, British Retail Consortium director general said: “From the breadth of the questions that the review is to address it’s clear that the government intend to take a broad and open-minded approach to finding solutions. That will meet with strong support in the business community.
“To guarantee that this review is a success it’s absolutely crucial that the government seeks authoritative and independent analysis as it progresses, with solutions based on the objective consideration of supporting evidence.
“Taking this approach will guarantee that the government’s own assessments are robust and that the necessary sweeping reforms deliver a fairer and sustainable system, one that ensures that the tax more closely reflects the wider economic conditions and allows businesses to remain competitive.”
However Labour's shadow exchequer secretary to the Treasury Shabana Mahmood, said: "Britain's businesses need more than just a re-announced review. Labour will take immediate action by cutting and then freezing business rates for 1.5 million small business properties."
Current valuations are still based on property prices in 2008, before the economic downturn hit the value of commercial real estate, as the government postponed a revaluation scheduled for last year.