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Business rates hike should be dropped

The government has been urged to reconsider plans to raise the amount of tax that retailers pay on their properties.

The British Retail Consortium (BRC) has said that annual rate increases, business rates revaluation, loss of empty property relief and business rates supplements could add £1.6 billion to the £5.45 billion retailers paid in rates in 2007/2008.

The call to soften the tax burden on beleaguered retailers came as the Business Rate Supplements Bill got its second reading in Parliament. The new legislation will give local authorities the power to levy extra tax charges of 2 per cent to pay for special infrastructural projects.

Research carried out by the BRC revealed that retailers, dependent on extensive floor space for their businesses, pay a disproportionate amount (25 per cent) of business rates when compared with their role in the overall economy (8 per cent of GDP).

The BRC wants to see an immediate freeze on all new business rates and the reinstatement of empty property relief.

Stephen Robertson, the BRC’s director general, said: “Many retailers are struggling with the triple whammy of falling sales, crushed margins and rising costs. The Government must revise its plans to impose a range of extra burdens, which can only increase the pressure on retailers and destroy more of the UK’s three million retail jobs.

“Retailers are crucial to livelihoods, customers and communities. We don’t expect handouts but we don’t want further handicaps.”

The BRC said it wanted the government to take specific steps to help the retail sector.

The 50 per cent Empty Property Relief Rate, abolished in April 2008, should be re-established.

The government should not introduce any business rates increase in April 2009. The BRC argued that rates are due to rise in line with last September’s 17-year high inflation level, which stood at 5 per cent, and would cost retailers £250 million in additional tax charges.

The next business rates revaluation, which will use rental values from April 2008 as the basis for business rates as from April 2010, should be postponed until the property market regains its equilibrium.

And safeguards must be put in place, including a compulsory business vote, before any new Business Rate Supplement is implemented.