// A Treasury committee report calls for the government to fix the “broken” business rates system
// The current system of rates on businesses is “unfair” as it puts more pressure on high street stores than other sectors
A Treasury committee report has urged the government to fix the “broken” business rates system as it is continuing to affect high street retailers.
The influential select committee said that the current system of rates on businesses is “unfair” as it puts more pressure on high street stores than online.
The report, published today by a cross-party committee of MPs, said the government should “acknowledge this and explain whether it is government policy to allow the growth in business rates to outpace inflation”.
- Retail insolvencies hit five-year high
- Retailers brace for £137m bill increase from business rates rise
The delayed report release follows the appointment of Mel Stride as the new committee chairman.
Meanwhile, business groups have called on the government to provide retailers with an “immediate respite” from increases in the property tax.
The committee has been presented with alternatives to business rates such as a land value tax, online sales levy, profits tax, single consolidated tax and hybrid tax.
“It’s abundantly clear that the current business rates system is broken,” Committee lead member Alison McGovern said.
“The tax represents an increasing burden on businesses, particularly those with a physical high street presence struggling to remain competitive,” she said.
“The government must ensure that business rates align with its aim to boost productivity and do not disincentivise growth.
“The committee was presented with numerous alternatives to the current system, but none of them had been sufficiently modelled to examine who would be the winners and losers of any change.
“The government must examine such alternatives in time for Spring Statement 2020.”
BRC chief executive Helen Dickinson said: “Business rates are a significant driver of store closures and job losses and retailers have been getting a raw deal for too long.”
“While retail accounts for five per cent of the economy, it pays 25 per cent of the business rates. Such imbalances can be seen in transitional relief – identified by the committee as needing reform – which takes £1.3 billion from retailers and redistributes most of it to other industries.
“While the committee is right to recommend that government reviews alternatives to the broken business rates system, it must not do this in isolation. Any review must look at the whole suite of business taxation with the aim of creating a tax system that is fit for the 21st century.”