Should business rates be linked to energy usage?

The British Retail Consortium has suggested various changes to business rates. They could make it even more complicated.

by Emma Haslett
Last Updated: 04 Mar 2014

Business rates are about as unloved as a tax can get: the government’s various attempts to change how it works have made it one of the most complicated in the business. And now the British Retail Consortium is suggesting that instead of the value of a property, business rates should be linked to measures like energy usage and job creation. Because that’ll make it less complicated…

The BRC makes four recommendations as to how to modernise the tax: 1) link it to energy usage; 2) provide a discount ‘based on a given value per employee’ (ie reward job creation), 3) provide a discount based on a percentage of corporation tax payment (ie support successful businesses), 4) introduce a ‘simplified, banded revaluation system’.

The BRC is right in that the tax needs modernising: it does, after all, date all the way back to the Elizabethan Poor Law of 1572. The government recognises it too: it’s preparing a ‘discussion’ about it in the spring, and in the autumn statement (delivered, unseasonably, in December), the chancellor said small retailers would be given a £1,000 discount on their business rates, as well as a cap of 2% on increases in the future.

Helen Dickinson, director general of the BRC, reckons the options the organisation has put forward ‘would be good for the public, the economy and businesses small and large, while still providing significant tax revenues for the government.’

Others aren’t quite so positive. Retailer Paul Turner-Mitchell, who was part of the Grimsey high street review published last year, told the Guardian: ‘this is a report by the big boys for the big boys to save the big boys money’, before adding:

— Paul Turner-Mitchell (@PaulTMRetail) February 18, 2014

Whatever the recommendations the government adopts, one thing’s for sure: the tax’s new incarnation is unlikely to be more straightforward. Retailers, get your thinking caps on.

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