Following the Shadow Chancellor, Rachel Reeve’s comments widely quoted today that Labour plans to “freeze business rates rise until the next revaluation”, expand small business reliefs and then long term abolish the system all together, John Webber head of business rates at Colliers International said,
“Whilst we are great advocates of business rates reform, the Shadow Chancellor’s suggestion to abolish the system altogether without any concrete means of raising £26 billion of tax, smacks of playing to the gallery at the Labour party conference.”
He points out:
- The next revaluation is 2023, Labour would not be in power to freeze any business rates rises before then.
- The emphasis on expanding small business relief would not “save the high street”. There is already a myriad of small business rates reliefs. We also need to rebalance the tax take on the bigger retail players- the ones that create the most jobs and decide where to open and shut stores- if we seriously want to make an impact on the high street and save jobs.
- Replacing the £26 billion tax take by a “new, as yet undefined system” is too woolly a concept. How would Labour do this in reality? Reeve mentions increasing the digital services tax to target the tech giants – yet the government is involved in negotiations for a global deal on corporate tax, which is expected to be implemented in 2023, a condition of which is that countries remove any domestic digital service tax.
Colliers own view is that the current system must be radically reformed, but not thrown out altogether.
“We agree the system in current form is unworkable and have long been calling for reform. Overall rates bills need to be lower, the multiplier (UBR) cut to 30p- more manageable than the current 51p in the £ tax and the burden of taxation should be shifted away from the retail sector who contribute nearly a third of the total tax take. Rates reliefs should be reformed, empty rates relief extended, plant and machinery clauses reformed to encourage investment. We need more frequent revaluations, so rates better reflect values and an overhaul of CCA, the disastrous appeal system.”
“We agree we need to look at other means of shoring up the tax take – but declaring an abolition of the system altogether – a system that produces £26 billion of revenue for the Treasury – is naïve. We should learn from other countries that have fairer and equitable business rates systems and have a sensible discussion about reform to create a rates system that properly reflects the needs and obligations of UK businesses in the twenty first century.”
