We need new online tax or real-life UK businesses are DOOMED says ESTHER MCVEY
When this suspension was announced it was welcomed by the high street shops and pub landlords not only because it alleviated pressure on businesses suffering as a direct result of the pandemic, but because it showed that the Government understood that business rates were having a detrimental effect on bricks and mortar businesses.
It has long been argued that business rates are archaic and are killing off the high street but in recent years the growth of online retail has aggravated the debate because it has exposed the disparities between taxation of bricks and mortar businesses and online businesses. Since rates are calculated according to the rental value of the property, bricks and mortar businesses in prime spots like the high street often pay astronomically higher rates than online businesses who can manage stock from warehouses out of town. The situation is now particularly acute given the economic turbulence COVID-19 is causing on the high street.
Yet despite those positive noises earlier in the year and Government promising to conduct an in-depth review of business taxation policy, reform has been painfully slow with no conclusion in sight. Worse still, a fortnight ago the Chancellor announced the Treasury would consult with industry leaders about a possible increase in business rates for those in high value properties and announced in July that it would delay a re-evaluation of the tax until 2023 to ‘reduce uncertainty for businesses’ despite the fact the only certainty for businesses on the high street is footfall has fallen and purchases dropped, with high street stores saying their reduction in sales July to Sept 2020 has been 25/30%.
Managing director of Robinson’s Brewery, William Robinson, along with his brother, runs 260 Pubs, Inns and Hotels across the North West. It’s a family business and has been going for nearly 200 years. Never before in those two centuries have their pubs had to close despite two World Wars and the Spanish flu of 1918. It is only now during this Coronavirus pandemic they have had to close.
Speaking on the Blue-Collar Conservatism podcast, William talked about the devastation COVID-19 had caused to pubs and the high street and welcomed the cessation in businesses rates adding: “There needs to be a rebalancing of taxation in the economy. It can’t all be about bricks and mortar taxes. A new fairer, modern tax needs to be considered, like a sales tax or a delivery tax that ensures large online businesses like the Amazons of this world pay their fair share. This can’t be kicked into the long grass. Now is the time to address this issue.”
He also warned against the reintroduction of business rates in April 2021 after what is the quiet months after Christmas and a weak prior year. He said: "I’d like the Government to come out with a very clear statement to continue the cessation of business rates into 2021/22.
"I think doing that would allow all pubs to get back on their feet properly and retain more staff and the key to that is about giving long term confidence because people are worried that come next April all their costs - and business rates are a significant part of those costs - are going bang straight back to where they were which could take them over the edge.”
Whilst businesses appreciate business rates are one of the Government’s most dependable and lucrative sources of income, generating approximately £30 billion a year for the Treasury, this is not the time to wobble on transforming an out of date tax. Short term lucrative tax should not imperil businesses long term.
It is therefore incumbent on the Government, whilst holding this consultation on business rates, to establish a way to tax online and high Street businesses fairly and not to have the burden of tax disproportionately fall on businesses on the high street.
