The Big Question: How should business rates be reformed?

Website Editor • Aug 31, 2021

The Big Question: How should business rates be reformed?

Fundamentally, the burden of business rates on retail has to be reduced from current levels. The disconnect between rates and rents in the sector is stark: between 2001 and last year, growth in retail rates was more than five times greater than growth for retail rents. Rebalancing can be achieved by reducing the uniform business rate (UBR), revaluing more often, and removing ‘downwards transition’, which is still pegging retail rates to 2008 rental values in many locations. This is really quite striking when you think about it.


Research commissioned by Revo confirmed the areas losing out most are actually those the government’s levelling up agenda is supposed to help. The rates rise in the North and Midlands has been almost 12.5-times greater than the rise in rental values, compared to 4.1-times greater in the South. So it makes political as well as equitable sense to truly rebalance the tax.


I was privileged to contribute to Revo’s submission to the government’s recent business rates review – including calls for the UBR for retail to be ‘reset’ to 30p, annual revaluations, ditching downwards transition, and reform of empty property taxation to better reflect the realities of the retail property market.


Of course, this has a cost. But supplementary tax streams such as an online sales tax, turnover tax or delivery charge could plug the gap. They can also offer a fairer way of distributing the tax burden – allowing the system to evolve with consumer trends and tap into a sustainable revenue stream.


 


Jonathan Cole, Investment Director, Ellandi

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