Rachel Reeves is planning more business bashing taxes with a £1.7 billion raid on retailers that could push Britain’s high streets further into decline. Since taking office, the Chancellor has already increased employer National Insurance contributions in a move which hit the sector hard.
And now it’s reported she will use her autumn Budget to raise business rates for department stores and supermarkets as she scrabbles around to plug what the Treasury claims is a £5 billion gap in public finances. The rates increase will be sour news for shoppers who have already seen a host of popular brands close shops in towns this year.
Ms Reeves is reported to be planning to target the sector in the wake of Labour’s humiliating U-turns over winter fuel cuts and welfare reforms.
The Telegraph reports businesses are not taking the Chancellor’s plans lying down, with Marks and Spencer leading a group of retailers opposing the rate hikes, including Asda, Morrisons, Primark, Sainsbury’s, Tesco and B&Q owner Kingfisher.
It’s reported M&S have said 111 branches could be forced to close if hit with higher bills. In evidence submitted to Angela Rayner’s department, which oversees councils collecting business rates, the long-standing retailer warned: “Given larger retailers are often anchor tenants on the high street, taxing them to support smaller stores is a false economy – if larger shops close, smaller shops sufer.
“The proposed reforms could therefore accelerate the decline of the high street by encouraging retailers to close larger high street stores.”
It’s understood the new tax could affect almost 17,000 business premises and will not only hit the high street. According to the Telegraph, the tax will also hit other firms such as hotels, restuarants, zoos, cinemas and breweries.
Business rates are based on your property’s “rateable value”. This is an estimate by the Valuation Office Agency of how much it would cost to rent a property for a year on 1 April 2021.
John Webber, the head of business rates at property frm Colliers, told the newspaper: “It beggars belief how the Government’s plans will help if they lead to reduced investment and expansion or even employment opportunities in these bigger high street stores.”
A Treasury spokesman said: “To deliver our manifesto pledge and provide certainty and support to the high street we intend to introduce permanently lower tax rates for retail, hospitality, and leisure properties from next year. Unlike the current relief for these properties, there will be no cash cap on the new lower tax rates, supporting some of Britain’s most loved high street chains to continue to create jobs and grow the economy.”