New ideas on business rate reform from BRC

New ideas on business rate reform from BRC

“Ground-breaking” ideas to overhaul the UK business rates system, including charging businesses based on energy usage, have been put forward by the British Retail Consortium.

The BRC said it, along with other business groups, had “long argued that the current system of business rates creates disincentives for investment in property”, and was “woefully out of date”.

Helen Dickinson, chief executive of the BRC, said there was a “once in a generation chance to fundamentally change the business rates system and the time is right to think creatively and in the best long term economic interests of the UK”.

One option put forward by the BRC is to shift the basis for taxing property by replacing the current system with a tax based on another measure such as energy usage. A second would reward employment, giving a discount on Business Rates based on a given value per employee, which would be capped.

The other measures proposed are to support successful businesses by providing a discount based on a percentage of Corporation Tax payment; and modernising the existing system by introducing a simplified, banded revaluation system, with revaluations on a more regular basis.

Dickinson said: “These potential options would be good for the public, the economy and businesses small and large, while still providing significant tax revenues for the government.”

The BRC said the modernisation option alone would not be “effective action to remove the disincentive to invest in property”, but that other suggestions put forward could be based on a modernised system.

John Rogers, c.f.o. of J Sainsbury, who chaired the group of executive level members from across the industry leading the project for the BRC, said: "The current system is outdated and cumbersome and does nothing to encourage retailers to invest.

“We believe we can do better for business and for tax payers and these options represent tangible progress in the debate on what reform could look like if we think about retail in the future, rather than the past.”

The options put forward by the BRC will be fleshed out with the help of EY (Ernst & Young).

Bricks-and-mortar retailers have previously told The Bookseller that business rate increases in April would put a further squeeze on margins in a climate where physical book sales are dropping.