RPI rate worries retail and property industries
By Jon Whiteaker - 10:15AM - Wed 13th October 2010
Industry representatives for the retail and property sectors have warned that the current level of the Retail Price Index (RPI) will result in damaging business rates.
The tax on businesses is currently determined by multiplying rateable property values with the RPI but both the British Retail Consortium (BRC) and British Property Federation (BFP) have claimed that maintaining this current system will unfairly penalise retail.
September’s RPI figure of 4.6 per cent is above what many retailers expected and the BRC has already called for the government to amend they way business rates are calculated.
Stephen Robertson, Director General of the BRC, commented: “Basing a whole year’s rates bills on one, almost random, month’s RPI makes no sense. The government must switch to another way for next April and beyond.
“Using the Consumer Price Index, as it does for pensions is one option. Or using the 12-month average RPI rate from October 2009 to September 2010, which would iron out inflation rate volatility, is another.”
Inflation has fallen at a much slower rate from the beginning of the year than many expected and with government spending cuts about to be announced, a large number of retailers could see their budgets stretched.
Liz Peace, CEO of the BPF, said: “This is bad news for retailers, landlords and the economy.
“Coming as public spending cuts begin to bite, this further tax increase will seriously hamper retailers’ ability to soak up some of the inevitable public sector job losses and will make life even harder for small businesses.
“This tax will also have to be paid in full by the owners of empty property at a time when the commercial property market is already overly burdened by this tax on hardship.”