Retail leaders urge government to prioritise business rates cut

Retail leaders have urged the government to prioritise the reduction of business rates over further cuts to corporation tax.

In a letter to George Osborne, groups including the BRC, ACS and the British Chambers of Commerce warned the chancellor’s aim of lowering corporation tax rates to less than 15% would not do enough to mitigate the crippling costs on small businesses.

Osborne has floated the possibility of slashing corporation tax as a means of encouraging businesses to invest and expand.

But the letter, also signed by the Federation of Small Businesses and the Association of Licensed Multiple Retailers, says the threat to the economy posed by business rates has reached a “tipping point”.

It calls on ministers to bring forward proposals to move annual increases in business rates from RPI to the much more widely used CPI before 2020. The letter also recommends simplifying the rating system for the smallest businesses and revisiting plans to use the system to incentivise investment.

“We welcome action to stabilise economic uncertainty and have all positively welcomed the government’s long-term reduction of corporation tax, but to make Britain a ‘super-competitive economy’ business tax reforms must go beyond cutting corporation tax,” it argues.

“Britain has the highest non-domestic property taxes in Europe, which acts as a brake on investment for all businesses looking to invest in the UK.

“Corporation tax has fallen since 1990 but business rates have steadily increased and make up a much higher proportion of businesses’ tax liabilities. 

“We believe government action to cut business rates costs could positively shape growth in the UK economy for decades to come.”

ACS chief executive James Lowman added that the chancellor must “move further and faster” to reduce the burden of business rates and enable small businesses “to invest in their long-term future”. “Business rate costs are a significantly higher burden than corporation tax for small businesses, and we hope the chancellor will recognise this through swift policy interventions,” he said.